This part is fun to read from a corp finance perspective. S&P posits that MPEL and its partner in the investment group that comprises MCE (which in turn controls "Studio City Co Ltd" -- the latter the issuer of Studio City's structured debt) will support the project as it becomes more significant to MCE and its owners, and that they, and implicitly, the seven banks in the consortium with authority over the structured notes covenants, will negotiate in good faith to make needed mods and otherwise support the notes to remedy any covenant issues (capital levels, debt coverage ratios, operating performance, table allocations, etc). Gosh, we think Studio City will become more valuable as it ramps over time too. hahaha
"We believe Studio City still has sufficient time to renegotiate covenant terms with its creditors, if required. In our opinion, Melco Crown Entertainment Ltd.(MCE) Group is likely to support Studio City in case of credit stress, and this support underpins the rating...
The stable outlook on Studio City reflects our expectation that the project in Macau will be on budget and will not face any significant delays," said Ms. Lin. "We expect the company to remain highly leveraged over the next 12 months. The outlook also factors in ongoing managerial and financial support from MCE Group."
We could lower the rating if we no longer assess Studio City to be a "strategically important" subsidiary of MCE Group, particularly if the group materially reduces its stake in the company. We could also lower the rating if we believe the group credit profile of MCE Group has weakened.
We could raise the rating on Studio City if we raise the group credit profile of MCE Group. We could also raise the rating if we assess Studio City as a "core" entity of the group, although that is less likely over the next 12 months."
Get a copy of the full report and enjoy the coverage math... lots of room to service the debt while SC gets going hard.
Unlike the equity analysts, these guys actually work with management teams to understand structured finance and covenants as well as levers and exec mgmt competence and flexibility/debt coverage work. today they affirmed MPEL sub debt and MCE (separate Studio City funding entity) debt ratings and outlook for SC, which is scheduled to open in 3Q15.
"Studio City Co. Ltd. Rating Affirmed At ‘BB-’; Outlook Stable
24 April 2015 17:45
HONG KONG (Standard & Poor's) April 24, 2015--Standard & Poor's Ratings Services said today that it had affirmed its 'BB-' long-term corporate credit rating on Macau-based gaming company Studio City Co. Ltd. The outlook is stable. In addition, we affirmed our long-term Greater China regional scale rating on the company at 'cnBB+'. We also affirmed our 'B' long-term issue rating and 'cnBB-' long-term Greater China regional scale rating on the senior unsecured notes that Studio City Finance Ltd. issued. Studio City Finance's existing and future restricted subsidiaries, including Studio City, guarantee the notes.
"The affirmation reflects our view that Studio City's improved cash flows after its casino opening in late 2015 should offset its potentially diminished debt covenant headroom over the next 18 months," said Standard & Poor's credit analyst Sophie Lin. "We expect the materially higher cash flows to support a
significant improvement in the group's financial risk profile despite tough operating conditions in Macau's gaming market...
We believe Studio City still has sufficient time to renegotiate covenant terms with its creditors, if required. In our opinion, Melco Crown Entertainment Ltd.(MCE) Group is likely to support Studio City in case of credit stress, and this support underpins the rating...
Two more integrated casino resorts are set to open in the next few years, hoping to cash in on the Philippines’ buoyant economic growth. These include the Manila Bayshore, a joint venture between Alliance Global Group Inc. and Malaysia’s Genting Group; and Japanese billionaire Kazuo Okada’s Manila BayResorts.
The downturn in Macau, the world’s largest gambling market, has benefited mid-sized markets such as Korea and the Philippines as Chinese gamblers flock to new casino destinations with fewer restrictions.
Last October, Caesars Entertainment Corp. signified its interest to enter the Philippine casino industry as part of its overseas expansion.
The Philippines may become the next most attractive gambling hub in Asia given its proximity to a range of key tourism markets. It earned $2.5 billion in revenues in 2014, up 16 percent from the previous year.
Macquarie Research sees the Philippine gaming industry growing 20 percent over the next three years to hit $4.8 billion.
Port tycoon Enrique Razon’s Bloomberry, the operator of Solaire Resort and Casino, posted its highest profit at the end of 2014, mainly driven by its increasingly growing junkets that bring in foreign high rollers....
Re my comment 13 months ago with the stock at $8:
"If you listen to the new cfo talk about this technical accounting, it is obvious he has no F idea what he is talking about. LOL "
Here is the update: the new CEO and CFO the clueless cheerleaders thought would rescue the mess that McKnight created and the salvage of the brands and balance sheet, are out the window.
"McKnight on Mooney's exit, go forward plans
We spoke with Bob McKnight Friday about the departure of CEO Andy Mooney, some reasons behind the change and plans for the future.
Bob said the board of directors decided to make changes to the executive leadership to improve its ability to execute against the operating challenges that have been facing the company these past few months...
Bob also noted in our conversation Friday that CFO Richard Shields, who will be leaving as well, will be helping new CFO Thomas Chambolle, Quiksilver Europe’s CFO, to settle into his new role as company CFO."
Now, if only the cheerleaders will chase this back above $5 we'll be happy to play it short again...
Debt debt debt, Dead dead dead brands... and $2500 wetsuits that look like suits with ties? "Graveyard stock" is right! They needed to bring back co-founder Randy 10 years ago before the ridiculous Rossignol deal sealed their fate.
Those will sell like hotcakes and the neon snowboard gear did back in the early 90s! LOL
Fun trip down memory lane... disappointed the cheerleaders have apparently lost enough capital to abandon the story... We'd love to short it one more time...
With LVS back to where it was before the call now, Sheethead Shirley raves about her big gains on what 50 shares short? LMAO Glad janetate toast drjackoff "loves" everything here considering how F stupid his running tilt commentary us here and trust he and his "cabal" also "loved" having his bs on Macau, tables, LVS and MPEL shoved down their throats yesterday. LOL
For anyone new here? janetate has been called out many times here as "Shirley Mason" (goog that name if you don't know that story LOL). Special thanks to his toast alias trying to diss me for months with the same expression on many aliases on this and IKGH (which he hyped with Bain from $9 down to $1 and then started using brinerbriner and jugheadus on that board as "puthimon" and "marketmaker called out"). Yeah... you can see his jackoff posts undr drjackoff, toast, janetate, tahoejack, fkuimbecile, fkunyc, fku holly, blaqnite, mytek, idiotpumper and so on... here's a recent example:
"Shirley Mason... one deceptive, underhanded piece of work, devoid of any integrity... And given your nonsense on IKGH and here, do you actually think anyone has sold any shares based on your bs "bashing?" You are almost as ridiculous as matrixtrade, the putz who has tried to dis me 300 times here when he is the F moron who hyped MPEL was going to $75 in 2014 -- the same day in Jan 2014 I explained why we were selling out/hedging the core at $43. FY both -- with a fork.
For everyone else new to Shirley Mason (aka janetate, toast, drjackoff, blaqnite, fkuholly,fkunyc, fkuimbecile and all the rest of his inane aliases used here and on various other boards to carry on conversations with himself including congratulating himself on his most always incomplete or otherwise errant "analysis" of companies he is hyping or shorting), have a good laugh with the longtimers who have repeatedly called his bs out here."
If you missed this thread amongst all the diversionary bs of Shirley Mason (janetate, toast, drjackoff et all) and the little asian trading club pals (LOL), longs might consider reading through my comments on this thread, top to bottom. Then come back to the post above discussing the rating agencies, and then get a copy of Standard & Poors updated rating issued today (3 days later), regarding the sub debt ratings of MCE and of the separate debt structure and ratings of the associated Studio City bonds as regards the carefully constructed issuance for the Studio City project funding.
If you do that, it'll be apparent that my comments on this thread are more comprehensive than S&P's summary update, but they reach the same takeaways:despite current conditions, SC should have ample debt coverage to service related obligations and have headroom/coverage headroom overcoming risk related to the current market conditions and uncertain table allocations prior to opening Studio City, and then that MCE (and, derivatively, MPEL and the creditor group) is likely to continue to support the debt of SCCo regardless, and that they then have out until an unspecified future date (in the press release that is; S&P's quant modeling goes well past 17 months to the October 2016 date relevant to the table threshold). Of course, S&P makes only vague reference in the press release to their detailed modeling and related notes and that SC cO, MCE (and MPEL) have all that the options and levers I referenced throughout this thread, but as noted prior, all of that is available should they need it.
Again, the agencies actually understand what is going on in Macau, interact regularly with pols and execs running rated entities, and obviously have confidence that separate entity MCE and then SC Co. issuer will be successful with SC (and MPEL will use its ebitda/capital to support if need be) regardless of the currently difficult operating environment in Macau.
Ratings/outlook were affirmed.
was counting on... great news for the other players without the monolithic hotels to keep full with non-gaming patrons heavy in the mix.
But little old LVS is going to be just fine over time. As Shelly said, "We have been in stormier weather than this!"
Re my comment in part 2 below:
"So LVS stock is back to where it was last week (BFD) for at least a few hours?"
Now it is above the low yesterday... is little old LVS going to close green today, right ahead of better news from other players in Macau?
Galaxy, and now LVS, has the relevant pov -- Macau is all about the future, not the prevailing environment since Zhou was arrested in late July 2014, nor LVS' struggle to keep rooms full in seasonal GGR and VIP slowness -- rough realities for their massive 3k+ room hotel complexes likely to persist for them past new Grand Opening galas at G2, SC and up through the openings at Parisian and Wynn's Palace... unless Beijing and Macau begin taking action to protect jobs, the economy and tax revenues from gaming.
On that note. add up the GR taxation, annual land and gaming concession license fees (incl directly from MPEL) and all of the multiplier effects on economic activity/employment/housing rents etc. generation on macau, and the total is likely closer to 97% of all money flow on the island. The Golden Goose matters to more than just macau and hengqin and Guandong... China needs it all too, a showplace for international visitation, tourism and pride of china. Listen to Shel's comments to the CSLA's chinese analyst for a good chuckle on this part: "Aren;t you Chinese? you looked Chinese last time I looked," said Shelly to laughs in the background. LOL
"Not true"? My points were recitation of simple facts... i did not mention Vegas because the Vegas peice is trivial, a bit player now for LVS and not the focus or the future. Do some time series charting on ebitda sourcing since 2011 and you'll see that point vividly.
If/when LVS goes to Japan and or decides they need to do something else "big" to have a critical footprint in SE Asia outside of Macau (e.g. Manila), Vegas will matter even less to LVS.
MBS is indeed very important to them right now, just as COD Manila will soon be for MPEL -- a great venue apart from the spotlight glare in Macau... yet even at that, MPEL has increased share of total GR YOY, is now getting the Altira repositioning up and going, and still some 60% of peak VIP play is running on Macau -- essentially all the big quality junket customers who are not political foes of Xi Jinping, not corrupt govt officials playing with illicit funds, and not concerned about being seen playing for high stakes because of dubious backgrounds.
MBS generated almost as much adj ebitda there (almost $500m) as they did in Macau. Those long can be glad they have that since their Macau franchise is becoming the "MGM of Vegas"... lots of big, monolithic buildings to be sure. Those properties will be great as Shel hopes if LVS and Macau can build a book of steady convention business and GGR picks up even a little bit (mass and or VIP), but not as desirable a place to place for the monied player -- same as Vegas, the valuable patron actually gaming wants to stay in the more tailored venues in Macau... that is why MPEL and Wynn have better table/room key metrics.
But hey, LVS is good at the game and as Shelly said on the call, "We have been through much stormier weather than this and [he thinks] we are at the bottom now in Macau." That said, if I were long I would much rather see them crank up the buyback program vs paying out big regular and annual dividends. same for MPEL and WYNN, especially with the shares hammered down here.
On a brighter note, they still generated over $1B of adj ebitda for the Q and MBS (Singapore) numbers were very solid, even discounting the flat but fat holds. VIP continues to be ho hum for them, the legacy they brought onto themselves alienating the junkets in 2012. All of that is a nice backdrop for MPEL's Manila operations which, although just opened in feb, is likely now rolling out at least some of the 300 VIP suites in the Crown hotel there. Singapore for LVS and COD manila for MPEL are good news for both companies -- a place for VIP and premium mass (direct credit) players who want to avoid the spotlight glare in Macau.
Shel was also call it brilliant discussing the visitation limits... but a big yawn anyway. No one mentioned smoking bans... what? LOL Why hasn;t someone suggested smoking floors could perhaps be staffed with only those staff persons who smoke and want to work on smoking floors? Hard to suggest they would be "unduly" exposed to health risks...
So LVS stock is back to where it was last week (BFD) for at least a few hours? Pending supportive policy changes for Macau, those big, monolithic buildings of LVS are going to struggle to stay above 90% occupancy for some time given the new venues, especially Studio City and Wynn's palace next year, are going to be the places valuable patronage will want to "stay and play."
Longtimers here know we've often used LVS (and WYNN and mostly MGM) to hedge the MPEL allocations, but we've also minted long LVS (and the others) many times as shared right here when done. I'll pass on a detailed recap of LVS, but the aerial flyover is relevant to MPEL.
Shel continues to not grasp that people who know the business actually understand normalized holds. Unfortunately for them, the house did not play so lucky as they did in the PY quarter... at least they were consistent in not discussing holds much. Shel still seems oblivious that having the biggest room count, ebitda and earnings doesn't mean much unless one understands that ebitda relative to tables/keys and capital invested is what matters. Would someone who cares tell Goldstein to explain ROIC to Shel and the other parts just noted? LOL
Also predictable is that LVS VIP numbers are low. On one hand they say they don't care because they are not interested in that business, and on the other Goldstein continues to say at conference that they want to create relationships with the big, quality junkets... Rob understands that they ought not be excluding themselves from quality business during the current lull and that (VIP's low margins aside) there is something to say for generating ebitda.
Shel shared that the Venetian was packed out last week while the execs were there --good news -- and even the CSLA guy notes that Beijing is leaning into policy/stimulus for the economy that ought to help Macau over time. They went around on how great it is to have so many rooms -- the most in cotai and more than all the rest combined, but as has been the case (ebitda/table/key, adr metrics) since the Cotai strip opened, LVS massive monlithic buildings are not the "choice" place to stay or play. Surreal if you listen to the call, but Shel's focus on room nights for non-gaming patrons is ironically alot like MGM's Vegas franchise (~it's ok if people don't gamble, we will make money on F&B and ADR)... cont
Cool Bloomberg piece out on these guys too. It is the same 100 or so top corruption targets Xi Jinping's "tigers and flies" corruption crackdown, then "fox hunt" and now "skynet" derivatives team has been talking about since Zhou's (China's former national security director now convicted of massive fraud crimes) arrest in late july shook everyone up on China's search for real crooks and Xi Jinping's political foes alike.
China has now released more details/photos, departing flights and likely locations of the specific people it is still hunting down. Many of these people are alleged have stolen millions and billions from China via fraud, extortion, embezzlement and so on... but read several of the aritcles to learn there is not a peep about corruption or money laundering in Macau, nor has anyone running casinos in Macau been put on any list.
Yet none of these people or their friends are going to be seen in any casinos anywhere if we were guessing... an no, they are not playing in Vegas and haven't since last July as noted on various prior threads. So who are the players still playing on quality. legit VIP tours in Macau? Xi Jinping's pals and everyone else with legit wealth that is not at risk of being sent to jail or worse.
goog title for WSJ article, but the Economist and Bloomberg pieces and others are better and more info/links
If they remain on track with the timing they have shared with the street, COD Manila is likely opening up those 300 VIP suites at Crown Resorts right about now...
Then a few comments on Bain's update courtesy ad hominem breath toast drjackoff...
The analysts paying attention know the story on Manila though Shirley's pal Bain does not... frankly, I am surprised Bain still has a job after his blown calls on IKGH and the gaming sector altogether... he has not gotten around to even thinking in terms pm do -- most have done as we have, adding shares but hedging out a lot of the downside since last July with various tactics --many of which were shared as put on and taken off right here as matrixputz and Shirley's little cabal trading club and conversation with himself reveal over and over.
But someone ought to tell Bain that MPEL is decidedly not "under-followed" vs the group... he must not have access to a Bloomberg terminal where someone could show him that MPEL has only 2 less publishing analysts than does MGM, WYNN and LVS. When Jefferies completes the SA buyout, Bain can always try his luck at open microphone night at one of the clubs here in LA. LOL
Reading your question twice, I am not clear what you have for numbers, but I'll expand on what I wrote prior.
The "guideline" (not a promulgated rule or law) is that Macau's annual table growth will be limited to 3% per year for the ten year period... so now take their program inception number and multiply it by 1.03 out through the end of the ten year period and you will have the math for the referenced "average annual rate of growth of 3% -- and what I wrote: ~ 1800 more tables to come until the end. Do your own math, but the "170" tables /existing casino is another point entirely.
N.B. that LVS opened the rest of Cotai in 2013 and that annual limit was exceeded by a bunch, but they have clarified many times that they meant what they said "average annual growth." Macau officials (and DICJ) obviously issued this guideline with full knowledge of the pipeline project plans they have approved for Integrated Resorts development and also any more dribs from the Wharf scene, and so knew they would have a lull for 2014 (their basis for the calculation actually reflected a decrease of some 80+ tables last year as you may know) and that 2015, 2016 and 2017 would be big surge years for the 7 major properties with significant casinos coming in this timeframe.
After this second wave of Cotai development though, things ease hard from a pipeline perspective out through the end of the 10 year period. As noted in my recap on the topic, the practical reality is that they may push hard enough on the limits to shut down or sharply curtail the size and capital devoted to new projects after the current wave of ~$25B being spent on the projects with cement poured already... but if they want another dozen or so art museaum at this special purpose SAR, that is what quality management teams will do -- sending their capital and resorts developments to other venues where it will be greeted with open arms as per the Manila piece from Asian Gaming journal I shared prior.
I see matrixputz is running his mouth again today... read the above for the story on that idiot.
and in the conversation with himself, Shirley praises blaqnite's bs here. LOL remember this? Yeah, the record is clear.
Shirley suggests "mark my words"... he forgets we already have right here where janetate,toast,drjackoff, idiotpumper,tahoejack,mytek, matrixtrade and all the rest of his coy cork soaking on his other bs aliases' posts.
I already did "mark your words"
From january 7th:
and speaking of entertainment... how about that darqnite putz...
On Nov 6th he tells us he's buying at $25 for the first time as "value", then he tells us he'll buy it at $17. LOL
"blacqknight1 • Nov 6, 2014 2:33 AM
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I joined the house of pain tonight (1st position) I am begining to think there is some form of value here
I meant to note earlier that some may have noticed LVS ratings were held steady on their big rewirte/increae with their lender group.
Some may have noticed that SC bonds nor any of MPEL's other bonds have been downgraded... do you suppose it might have something to do with the reality that MPEL continues to generate on the order of $1B USD of adj ebitda on an annual run rate basis despite the slowdown all operators are adjusting to?
Then too the rating agencies actually understand the business and financial statements and that both Manila and much of SCity's operating costs were being carried in the 4Q numbers, but there was only a whisper of the big revenue stream increases to come now that COD Manila is ramping, and Studio City is going to take significant share from the less exciting venues apart from COD on Cotai.