Abe wins general election raising hopes for casino bill
"Japanese Prime Minister Shinzo Abe has won a big win in general elections and pledged to drive through his economic reform plan, raising hopes a bill to liberalize the country’s casino market may be back on the agenda.
The LDP and its junior partner, the Komeito party, won 326 seats in Sunday's poll to maintain a two-thirds majority. That was unchanged from the coalition tally before the poll, although the LDP itself slipped slightly to 291 seats from 295. However, turnout was a record low.
The casino bill was put on hold indefinitely last month amidst a political scandal that prompted Abe to dissolve parliament and call snap elections. Abe is a strong proponent of the bill as a key pillar in his plans to boost tourism revenue."
Regarding that last sentence: "Abe is a strong proponent of the bill as a key pillar in his plans to boost tourism revenue"...
Abe should share his ideas on stimulating revenue and tourism via Integrated Resorts/Gaming with Jinping just for good measure. LOL
Macau CE appoints new Finance Secretary, shakes up leadership
Macau Chief Executive Fernando Chui sai-on has appointed Lionel Leong Vai Tac as the territory’s new Secretary for Economy and Finance in a wide ranging reshuffle of top leadership.
Executive Council member Leong replaces Francis Tam Pak Yuen who had held the post, which traditionally oversees gaming policy, since Macau was handed back to China from Portugal in 1999.
Chui, who was recently re-elected for a second term, also replaced four other policy secretaries.
"It's a big change in the leadership of the next government, which is surprising. It shows that Chui wants to change government practices and policies," Eilo Yu Wing-yat, a University of Macau public administration scholar told the South China Morning Post newspaper.
The new team will takeover on Dec. 19th.
MPEL 820k additional shares filed last night makes it six (6) days in a row with meaningful activity prior to Xi Jinping's visit next week, totaling 3,689,522 shares on top of the 1m shares they did last Q. At present levels, another ~16,000,000 shares to go under the initial $500m authorization.
Excellent news for ROIC and adj ebitda/share going forward...
MPEL filing last night adds another 820,000 shares, the sixth day in a row (prior to Xi Jinping's visit next week) of serious buyback activity under the initial $500m authority. At current levels, another 16,000,000+ shares to go...
Again, given that Packer and Ho understand the relevant industry dynamics and the AP market arguably better than any other executives in the business, refreshing to see them step up to use a little bit of their capital flexibility to improve ROIC and adj ebitda/share, a fine contrast to the gloom and doom endlessly being regurgitated since late July by the lame media and weak analyst group running around yelling, "The Sky is Falling... the Sky is Falling" on China and Macau...
Pointedly too, given that MPEL is leading the group on mass and premium mass yields, occupancy, etc in Macau, remember that China (as an industrial nation and increasingly consumer focused direction/initiatives and call it 100% importer of fuel) is benefiting more than any other nation from the massive drop in the energy complex, without putting extraction/distribution job creation in jeopardy...
Re my comment: "Today put on a new hedge (MGM) which has held up too well relative to the Macau group on the prayer that MICE biz is really special in Vegas and the dead albatross note (LOL)"...
Just covered that hedge at $20.60 on the retest (as noted above, this offset hedge was put on in case the group was going to continue the freefall today) with a $.70 pickup. Fun... but don;t want to be short (even as a hedge) any of the Macau names, even MGM, into the weekend given: how nutty oversold the group is down here; the HK Umbrella protest is vanquished; and Xi Jinping is coming Monday.
Good luck to you too Ed... better days ahead for Macau, and especially MPEL.
Last night's filing shows they bought another 800,000 at $23.08 w ave yesterday, making it now 5 days in a row with activity and a total of 2,869,522 share repurchased between $22.88 and $25, on top of the first 1m shares under the buyback plan last Q at ~$27.
As the stock has gone off with the sector dropping further, these buybacks are coming "cheap" relative to the earlier buys. At $23/share, yesterday's w ave and the closing price, they can still buy another 17.5m shares or so under the current authorization. Given they have far better info on what will unfold in coming months on Macau policy and fwd VIP bookings from Suncity and other top tier VIP operators than anyone, it is good to see them stepping up to the plate and making a statement down here.
Again, that 17m+ additional shares (ADS equivalents) would take out roughly 4% of the baseline share count Ho and Packer's separate companies' ownership of MPEL up to over 70% of outstanding shares, which, unless they immediately re-up the buyback authorization, would be a fun time to "pull the borrow"... even though the SI remains light, especially considering hedge positions.
I shared the math on the 17m (before any bought in today which appear to be on the order of 400k or so as an educated tape study), but when done, Packer and Ho's separate companies will control over 70% of MPEL shares, up from close to 67% today.
Under the current buyback authorization level, clearly an agenda controlled by Ho and Packer who together own some 67% of the company, the $500m will let them retire another 17,000,000 or so shares at $24/share, a number on top of the 3m shares taken out of late.
MPEL disclosed in their early 2014 filings that they are now planning Phase 2 of COD manila and also a second or "expansion" phase for Studio in Cotai, so, assuming the new Macau/china policy directives make sense to deploy more capital in Macau, that is a busy agenda for them over the next several years on top of Studio City rollout and Tower 5 at COD Cotai... but they have also been earmarking another $5B or so for a major Integrated Resort in Japan, which for now is on legislative hold in Japan for all would be concessionaires. For how long? Indefinitely? They have now missed the Olympics urgency.
In this context, it is interesting to see the share buybacks kicking in with some seriousness this week, ahead of Xi's visit... they began with 1m shares at ~$27 last Q, and now they are more aggressive at $24-25, so good statement to make. But might they get really serious now at $24 w/out Japan right now? Here is what Ho said on the last call:
On capital mgmt and growth opportunities (incl Japan):
"At this point the primary consideration is having the optimality to pursue transformational growth. To the extent that we become a more mature company with fewer transformational growth opportunities, then target leverage ratio will be more of a driving factor for us going forward. But to the extent if we were to see large opportunities such as Japan fall away that would meaningfully change our view and our policy on capital allocation and share repurchase and dividend."
That comment was made in early November. He does not sound afraid of Macau's future if you heard the comments...
With HK riot done and financial system/real estate stabilization accomplished and new stimulus now happening in China, a key piece for Xi Jinping to bring to Macau is a wave his hand on the Beijing/Shanghai (not about Macau) "anticorruption crackdown" being near the end, other than chasing down the now quantified 100 or so flagged officials being hunted after fleeing China with fraudulent conveyance. Some soothing words from Xi would go a long way to restoring Macau's sense of normalcy, perhaps a lot faster than waiting, in MPEL's case, for Studio City to open. Here were Ho's comments on these topics on the last conference call.
On the timing of opening of MPEL's Studio City and when customer sentiment will turn up again about spending/gaming in Macau:
"I think when we are ready to open I do believe that -- things do change very quickly in China and could change. Although I don't believe similar to the global financial crisis where there was a light switch event, this time around I do not think there is a light switch event.
But at the same time the anticorruption crackdown -- the way that has scared people and scared consumers, it's very much a physiological [sic psychological] thing. So I think if you look at the European debt crisis or other crisis in the past I think the moment people get used to the concept of this being with us going forward I think people will spend again."
Ho has said a few times that he sees Macau GGR coming back hard as Studio city and other new properties open in 2015 and beyond. Xi Jinping has the ability to make that "vey quickly" part begin to happen as soon as next Monday when he visits Macau. This will be his third trip -- the last one was in 2009 when macau went all but dark on the global financial crisis -- his first as President of China.
Lee is a legend to be sure. No file on that but will add to study list. We have pulled out some of our files to be ready when the oil complex cliff drop ends, but the world of small oil/gas players is going to get messy if this lasts much longer... the real winners will be the players with capital to take out the hurting little guys with quality leases but too much debt in the refresh drilling areas.
As for the gaming sector, as noted here we pulled the WYNN (short) hedge -- a couple days early it is now apparent -- but good to see MPEL finally making a statement and getting out the checkbook down here. Today put on a new hedge (MGM) which has held up too well relative to the Macau group on the prayer that MICE biz is really special in Vegas and the dead albatross note (LOL). Some here know we just took off all of the airlines and several other serious positions as too frothy now unless oil is down forever. Rough bet... kinda like saying Macau GGR will never grow again. As for that airline parallel, you know we said about MPEL in january and again in March this year at $43 on the way up to both tops, the "easy money has been made" and when those who own a sector cheap are stepping off and/or hedging gains (as most here then except the "mean little girl on AOL" (LOL), it is time to consider that only the momentum guys are still in the chase higher on the airlines, though that sector has a few analysts (that are actually excellent as contrasted with the gaming bunch) revising their PT and EPS targets to MUCH higher this week, such updates predicated on oil remaining hammered next year. That said, the airlines may well run longer, right up until oil turns around whereupon a rush for the exit on airlines seems increasingly so the likely end game.
Lots of other sectors coming in hard now too as those with incentives to protect (most funds do not) are locking down the year early. We are back to only 60% net long but ready to pounce (Xi's wave on Monday?)
At present levels, MPEL has another 17,000,000 or so ADS equivalent shares to go before announcing a new authorization. Assuming they get the 17m done while the stock is trading at distressed levels, Packer and Ho's companies together will then own 70% of MPEL... based on their buybacks since $27, it seems they don;t think Macau is down for the count just yet.
Exciting times on virtually all sectors for those trading the volatility. As MPEL is standing on the retest low, WYNN and LVS are catching up on the big drop of late; both are now down over 40% from the 2014 highs.
The billionaires running MPEL (Packer and Ho's separate companies own 67% of MPEL so the ownership pickup from buybacks benefits them more than any other holders) directed another day of share repurchases activity yesterday (just less than 230k shares at $24 w wave cost), making it four days in a row less than a week prior to Xi Jinping's visit to Macau on Monday. That brings the buybacks to 2,069,522 over the last 4 days...
Meanwhile, the rest of the group is playing catch up with MPEL's drop (shades of the 2012 drop right before more than doubling in 2013). Unless the sky is going to fall on China and Macau and while all the sellside analysts squirm about December's activity as the Unbrella/Pizza riots whimper into the sunset and the likelihood that Dec GGR in macau will look alot like November pending Xi's updated speech about Macau and surrounds next week, this is setting up for what should be a brighter year ahead for MPEL.
Goog title for article, but the Pizza Riot is over today...
Hong Kong’s tent city is getting dismantled, as pro-democracy protesters packed bags on the last day of their street occupation...with police pledging to clear the streets around the city’s government offices tomorrow...
The clearance tomorrow will end 11 weeks of student-led protests, with China refusing to budge on its decision to control the nomination process for the city’s first leadership election in 2017...
Police yesterday warned that they will take “resolute action” against anyone who interferes with the removal of blockades tomorrow, and Chief Secretary Carrie Lam, the city’s No. 2 official, today urged the students to clear out voluntarily over the next 20 hours.
“We will not resist tomorrow,” said Vincent Man, 26, who works in customer service. “It’s meaningless to get arrested. You won’t draw much attention, nobody will care now. It will just become a piece of news.”
Hong Kong will shut government offices tomorrow while the clearing takes place, and Lam cautioned student leaders against increasing their numbers at the Admiralty site...
Talks have failed with Leung and Lam both saying that what the students want -- open nominations for 2017 chief executive candidates -- is against the Basic Law, the city’s de facto constitution.
“The government is not responding to any of our requests, so it will be meaningless to stay,” said Andrew Sin, 33, a volunteer helping with supplies. “The movement has been going on for two months; its very difficult to ask people to stay. But at least we’ve made a record.”
Lazlo Birinyi, arguably the world's foremost market quants and technical analysts, had this to say about the markets: "the stock market operates as a closed system with all investors playing a zero-sum game: one group of investors supply the stock to fulfill demand from another group of investors."
So here we have geniuses like "the little girl on AOL" talking about $21/share (after calling for $75/share in 2014 in January and trying to dis me for calling the top aft $43 back then allthe while knowing nothing about street terms and hedging) and Jane Tate telling us how "happy" she is to be short while knowing nothing about MPEL's disclosure filings... and just over the last three days we have the two young BILLIONAIRES who with their separate companies together own 67% of MPEL and arguably know more about gaming, china and macau than anyone else in the business, aggressively buying in MPEL shares...
Rhetorical: (1) Are there any thoughtful inferences to be drawn less than a week ahead of Xi's visit? (2) Isn't it fun filtering the signal out of the noise of clueless analysts, lame journalists and incredibly stupid posters here?
I looked right in a magic crystal ball where people are gathering to chant about how "happy they are to be short MPEL."
coincidentally, up 35% would take this now value stock back to the 40w ema, whereupon it would become a "chart buy" for all of the "genius" advisory services.
Those with some sport and capital might want to do as the !#F filers did last Q with their capital... As note prior, 11 of the largest 15 and 21 of the largest 25 holders at the last filing date either initiated or added to their positions between $27 and $36.
Those concerned about further downside might want to review prior threads re hedging one's downside exposure... but today's little double bottom retest appears to have run into the buzzsaw of MPEL's share buyback plan.
Love "Jane Tate's" (another one of Shirley Mason's special "friends"?) post today... "happy [Sybil says] to finally be short"... Shirley's boss, a little fella from Cambodia?, should have shorted WFM a month ago (up 35% since) or even little old BABA this morning -- she could have caught the bottom in those too. With varying timelines, that is what a head and shoulders pattern fail looks like when it resolves to the upside after testing key support levels. Again, have a look at a good log chart comparing MPEL WYNN and WFM... better yet, index the values to MPEL as the baseline. ROTFL
goog the tilte to see the article I referenced yesterday... yhoo lopped off half of the excerpts...
good to see MPEL buying meaningful shares during eaxch of the last three days, on top of the 1m shares they bought in sep around $27... apparently they don;t agree with the analysts nbo buysiders even bother to read, let alone Shuli and Jim detar... and certainly not the idoits posting up mounds of stupidity here.
Did I mention that after everyone except committed 13F filers threw in the towel on WFM the stock rallied 35% over the last month or so?
what is Xi Jinping going to do for Macau other than wave his hand that Macao is a fun destination for everyone except those committing fraud against China? We'll find out Monday when he flies into Macau for the celebration of the Portugal handover... and for those with a historical perspective on Xi's last visit, it seems likely he'll be pleased with the progress since his last speech there in 2009... especially the contributions of MPEL, and LVS and WYNN in their existing and new properties under development.
MPEL's buyback plan is finally engaging with some serious activity over the last three days.
Over the last three days they have repurchased the equivalent of 411,600, 627937, and 800,000 ADS shares, for a total of 1,839,537 shares. Yesterday's buying was the cheapest with a blended cost of $24.33.
Might they have a bit more insight into what happens than does Shuli Renn and the confederacy of "geniuses" unhedged short down here?
The "retest" of the recent low referenced here a few times is front row again today. With Xi Jinping coming on Monday (what if anything will be in the gift basket/wave of his hand?), a week ahead of the new Macau leadership being officially sworn in, will this group and stock begin a sharp reversal sometime soon such as that seen on WFM after its extended selloff many sellsiders suggested it would never rebound from (WFM is up some 35% from the low a month ago), or is the malaise engulfing all Macau names -- and most beta/high growth stocks for that matter -- going to continue past year end pending 2015 catalysts being discounted more than not at all?
We took off the pair short on WYNN this morning...
Given that Packer and Ho's companies own 67%+ of the stock and that other professional ownership is another 25% or so of ownership, only around 5% of ownership here is in retail hands and that most mutual funds have oct 31 year ends, any serious tax loss selling is already done. Moreover, many hedge funds have offsetting box hedge gains that complicate tax outcomes.
Might retail holders consider selling their shares as the stock continues meandering along the rocky bottom and perhaps even retests the recent low at $23.50? Anyone who has net taxable gains in an individual account should be consulting with a competent tax advisor, on whatever short term or long term capital gains and losses they have this year. MPEL, as with all of the gaming stocks, is now down from where it was at the start of the year (and certainly where I commented here the "easy money has likely been made this year" and that "at $43, it is a good time to be careful and consider who was selling/hedging gains and the quality of the [momentum] buyers chasing it higher.
Sentiment is now entirely flipped around though, and Jinping's visit is next week (31 days wash period is a long time from now) , along with glad-handing by the new regime in macau,and both understand Macau's competence/value to China and the buildout of surrounds.
So will MPEL (and WYNN, another great story) soon climb, perhaps rapidly, out of the malaise gripping most ALL high beta/growth stocks, or will they continue to drag along the rocky bottom well into next year pending a clearer picture emerging for the future of GGR as the 8 new Integrated Resorts come on line? Those who have access to quality chart services might do a comparison of MPEL and WYNN charts on a monthly, 10-year (log) scale, in comparison to what has happened with WFM in the last 30 days. That is another great management& LT growth story... WFM is up over 35% in the last month... might the set up for MPEL/WYNN/LVS be next for sharp reversals?
Opportunities in Hengqin
Among Macao’s many challenges is the shortage of land.
The development of the adjacent 106 sq km Hengqin New Area in Zhuhai might offer more space for Macao to embark on new ventures. The University of Macau has been the first to seize the opportunity, building its campus in Hengqin.
Leong believes Hengqin can attract investment, expertise and human resources from Macao, in the areas of leisure, entertainment, hospitality services and the management of large facilities.
“The new area has been designated as a model of co-operation and innovation. It is a new platform for the upgrading of industries on this side of the Pearl River Delta,” he added.
Political reform in Macao is another subject which Leong has spoken about on many occasions.
Leong calls for the building of a broad consensus in political reform, so that people from all sectors will be represented. “Politics is the art of compromise. In Macao, in particular, I would say unequivocally that compromise is a practical necessity.”
Leong’s interest in civil affairs was apparent as early as 1997, when he set up the think tank, Research Centre for Sustainable Development Strategies. “I care about the interests of the community. I try to do something, to be someone who can help. So I take up public office, for the people of Macao,” he said.
fwiw, it seems Macau's new finance minister understands the importance of gaming and ensuring "reasonable and fair" policy mandates to the economic well-being of Macau and surrounds... he should prove to be way more effective than what McKnight called "suitable" -- he should be "excellent" and just what Macau needs to continue developing itself as a premier international leisure and gaming destination for years to come.