tell em doc! We love Bain's "channel checks" -- the reality is that he just issued his most important piece ever in the gaming space. into the teeth of this braod market drop and slam on the gaming stocks, his "channel checks" means "based on available public information and our conversations with executive management." The VIP piece is right on... marginal tour operators are the ones without funding or floors/table allocations from the likes of MPEL -- as with WYNN, only the house select VIP tours are playing at these choice venues... they are simply booked out with more profitable premium mass and other direct connectivity.
So Bain has it right on MPEL, top to bottom. The Wells Fargo, JP Morgan and Deutsche bank analysts and their research directors signing off on their recently published "research" should all be out of work after the 1Q14 results and refreshed outlooks are shared. None of those three jokers have a direct relationship with exec management or a grip on what is happening.
fun comments grftt...
fwiw, compounded at 10%, p doubles every 7 years... So 2013's $45B of GGR for macau would get to $90B in 7 years.
interesting turnabout for the group and beaten down companies today. The 40W ema is $35.01 -- no breach there yet...
As we begin the run into earnings now, the game of chicken is on for the hedge fund morons who think this is a good unhedged short down here, right where the hedge shorts are coming off and new pm are packing away shares while they are on clearance sale. LO
off topic for all but the corksoakers here...
Ihaving not seen this moron's posts in a while, I had to take the putz off the veiled ignore, but worth the effort to kick the lame pos corksoaker in the head. Funny as hell that the point I made was not the obvious part Forest thought he understood. LOL
Rhetorical, but hard to imaginehe could have finished 8th grade -- his every post is dumber than the last, same as his mr muckle alias.
Your comments are stunningly vacuous. You must be mr multiple alias or in the trading club with barefheadbob and mrmuckle, collectively the board's moronic corksoakers with nothing to say.
While you f heads suggest our posts are without value, the precise opposite is reality, and none of you gumps add anything other than drivel to the bull or bear perspective at any time. Off you go to flush with the other tarts.
My parents are your age and they own some 4k shares as their prime spec allocation... they don't play football, but they are both great skiers and swim daily at their place in San Diego.
But you don't have time to get in shape before earnings reports -- coming right up now: WYNN in a week; LVS in 9 days, and MPEL the week after that...
Since we have been in the name (3 round trips on core and about 10 trading sleeves up and down as shared right here as we went), it seems at least once a year a gift buy or careful hedge/pruning is indicated. The stock is more attractive to us right now than it was at $20 last July given that Macau's GGR should mash the hell out of $50B this year, and MPEL's piece will likely mash the current consensus of $5.77B of revenue for 2014. And remember that MPEL's room count (and adj ebitda) will double+ within two years from today -- and earnings growth should materially outpace that on operating leverage and Manila dominance...
More quant fun later...
This stock will be above $50 by EOY.
Brilliant call of within nickels of the bottom here though! Watch 'em rally this afternoon as all the algo f heads reverse the morning shorting across the boards. And if not? The coming reversal will be even more profound. LOL
The sector is sitting on important technical support levels right now. MPEL's 200 day ema is $34.30 and the 40w ema is $35.01... clearly the sector, including LVS and WYNN and Galaxy, is getting slammed along with MPEL, MGM and even BYD as are many other sectors that have outperformed the flattish big caps t15m.
Those getting mashed on margin or long calls or who tend to panic sell when things are shaky down may need to hurry -- we are within a week of WYNN's report and 9 days to LVS' likely making fun of WFC and JPM analysts suggesting Macau is slowing down. It is likely we'll hear that visitation and gaming revenues are not collapsing in Macau, and, further, the mgmt teams all expect another year of robust GGR and ebitda growth.
As a result, these ought to be levels where more than just a few pm will begin playing offense instead of just laying back on this name, LVS and WYNN.
It feels a lot like it did last year at $20 to us...
cronjms, a few comments on "expectations"
You have been around a while so you have likely read our view that most of the sellside group adds, at best, little value. We think the JPM team is the weakest in a group of weak sector analysts (excluding Bain).
JPM is the only broker that has lowered estimates in the last 30 days. In fact, excluding that "brilliant" thinking, IBES reflects that every other analyst and the consensus has risen throughout the last 6 weeks (as the news of 40% GGR for February and huge increase in mass and premium mass play became known.
Given the known factors that Macau GGR was up 19% for the Q, MPEL likely held share, MPEL's holds are outstanding, MPEL has the highest concentration of premium mass/direct VIP and the best margins in the business, and MPEL has never had collection/credit issues such as that experienced by others trying to emulate MPEL and WYNN's prowess in VIP, it seems let's say a bit strange that JPM somehow believes they know more than everyone else about MPEL's results being a couple pennies down from the consensus (IF their lowest in group number is correct that is -- LOL). In fact, since their comments are generally some of the most clueless in publication on the entire group, we take comfort in knowing they are helping to set up what will soon be the 7th substantial reversal to the upside since we have owned the core in the high $12s.
Maybe we should send them some flowers...
MPEL is not mentioned in the article, but the article entitled "Finding growth Stocks in a Shaky Market" emphasizes how Ivy Asset Strategy fund believes Macau centric companies are going to be premier growth stories to latch onto once the market stops blowing lunch all over itself. They own the companies as huge positions in a very large fund.
Here's my favorite part (it'll sound familiar to those who have been reading along here):
"...what jumps out of our portfolio is consumer discretionary, Hong Kong-based companies, and, drilling down a little further, Macau... growth rates are running well in excess of anywhere else in the world, typically around 30%."
Anyone reading here or otherwise doing any legit quant/fundamental analysis understands that MPEL is top of class on ROIC and ebitda/earnings growth metrics and has the largest percentage increase coming in ebitda, operating leverage and footprint as it brings COD Manila, Studio city and then COD Cotai Tower 5 on line.
So while the algo hft programs slam the Barron's online story from JPM "analysts" suggesting MPEL will miss on estimates this Q, I'll smile to rhetorically ask again: "Who is buying all the cast off shares?" LOL
The group has not corrected more than the big growth stories over the last 18 months, and now the group has come down after MPEL led the way down on light volume.
Crown Mgmt and Melco together still own 2/3s of the company -- they have sold none since the ipo.
Today's num eff Barron's pieces quote weak analysts errant views of what is happening in Macau. The point my partner made two years ago (top of thread) and that I have been emphasizing of late is that those relying on what weak analysts' think and or simply selling into the broad market, nasdaq and group weakness will have all year to repent at leisure.
Again, I am not saying that the stock can;t or won't go down further, but it continues to show support at current levels... the refrain most relevant for us is this: Who is buying the shares down here? Read the top of the thread one more time for the answer.
These guys are at it again... let's see now, d'ya think MPEL will underperform even MGM on "mass segment"? And do you think somehow MPEL has lost their direct and elite junket list such that they are falling to the bottom of the group on VIP? And then they talk about LVS getting "lucky" (i.e., better holds than they had 4Q after having the worst holds in the group over the last 6 Q or so)... and still JPM "analysts" fret over April results and mangled data they have from proprietary channel checks and surveys.
Could it be, just maybe, that MPEL continues to execute at the top of the group on and again, just maybe, that Bain (Sterne Agee) has it right that MPEL will continue its 3 year long record of kicking all comers on premium mass and adj. ebitda/operating leverage dynamics?
Those special analysts deserve their reputation for being amonst the weakest in the group... and Bain is earning his rising star at the other end of the spectrum.
Now we have Sterne Agee and even Citi beginning to incorporate revenue and ebitda numbers for 2015 and 2016. As we have said for 3 years here now, the analyst community remains behind Macau and MPEL's growth curves... but at least the recent inclusion of some revenue coming from the call it $2B+ MPEL will have invested in COD Manila and Studio City are beginning to be given some credit that MPEL is not expanding to generate no incremental ROI or ROIC at the margin.
We don't think the central planners in the new regime will fail to make progress with their current account surplus and massive firepower and capacity to pull the ropes and push the levers needed to support employment and economic prosperity for the masses. In our view, Macau will be a primary source of economic prosperity and tax revenue for China for decades to come and no company there is better positioned or managed than MPEL. Less
jlbhgb • Aug 22, 2012 7:26 PM
13Fs are Telling here
12 of the 15 largest holders added a net of 44m shares here during the 2Q -- at prices ranging between $16 down to $11 right at the end of June.
Now what do these players know that retail sellers these days do not? I mean beyond the reality that right now PM including us are finishing up covering in our offset hedge shorts, thus getting back to 100% net long...
See you at $15 before the next earnings call, and well above that soon after. Call it an educated guess. LOL
Great fun look back to summer 2012. We made similar comments in July 2013 when the stock pulled back a some 20% to $20 where we said that "correction" would soon be over (it began rallying again the next day to $40 by eoy 2013. We've made similar comments when it reset the base count and double tested the 50d ema, and now again as it pulls back with the entire market and concerns over China which have dragged down all of the gaming companies.
Of course, Macau now has about twice as many rooms as two years ago, Henqin and all of the infrastructure projects are just getting going, and the island's GGR run rate is dramatically higher than what it was for the t12m ended 6/30/12, and MPEL's rev, ebitda and adj ebitda and earnings have call it doubled, and here comes Manila, Studio City and Tower 5.
Now we have Sterne Agee and even Citi beginning to incorporate revenue and ebitda numbers for 2015 and 2016. As we have said for 3 years here now, the analyst community remains behind Macau and MPEL's
growth curves... but at least the recent inclusion of some revenue coming from the call it $2B+ MPEL will have invested in COD Manila and Studio City are beginning to be given some credit that MPEL is not expanding to generate no incremental ROI
GS analyst team, like most of the sellsiders in the this sector, has long had trouble connecting the dots. As the best properties and VIP floors/tables remain full (e.g., MPEL and LVS continue to run at better than 95% and 90%, respectively, occupancy so there is no press to find players to fill the floors), Macau's ITR operators are reallocating tables/rooms to the far more profitable/better VIP tours and their own direct and premium mass players.
The weaker junket operators are being culled off the team... LVS has had some high visibility problems with its own direct and junket credit issues in Macau and Singapore, and has begun anew saying they intend to reshape who and how they do business with marginal junket operators. Those following this part of the story for the last few years know that MPEL and WYNN have NOT had the collection issues LVS' has endured; obviously they are miles ahead of LVS on this score.
Rudimentary, but mass, premium mass and quality tours have less extended credit collection issues, fatter margins, better holds, and a far better utilization of the F&B and entertainment facilities than more VIP centric property utilization.
Back to the analysts, to our knowledge, GS 16% call for GGR growth is the high on the street. We'll give them credit for that... but we think closer to last year's 20% growth will be the end result for the year. All of the noise from the Motley Putz authors and the low value added sellsiders suggesting that 12-15% is "all there is" were saying all the same things last year as the total came in above 19%.
Meanwhile, if MPEL can continue to sustain market share of GGR, even 12% for macau should enable them to beat the street estimates as MPEL 's best in group adj ebitda margin and operating leverage and earnings growth. And what if Macau's GGR is more like 16-20%? Then operating results will again blow away sellside estimates, to the benefit of buysiders taking in all the shares they can down here.
To repeat, covered in the CAR pair today and now out of HTZ today at $26.60 to focus on stronger stories...
Since dip S intl has taken such a keen interest in our position here, and showed all how stupid he is while trying to dis my every post, we'll share that net of the CAR hedge, we ran this to a 32% gain since early November, for an annualized gain of 77%.
Good luck to the longs here -- good to see some 9m shares traded again today; that velocity makes it easy to trade. HTZ will be at least $30 by EOY... as soon as they blow out the excess cars and get going on that buyback, this stock will be rippoing above $30.
Say what? "He DID call the bottom after all didn't he"...
First, my post was on Monday the 7th, the day Gartman made the comment. Have a look at the chart -- MPEL traded at $34.43, $1.07 lower than the low of $35.50 today.
Second, he was not nor was I talking about MPEL or even the gaming sector. Close to 100% of high beta, high growth stocks are down 20% or more over the last couple of weeks, and my point was that the swoon is likely very close to the bottom given that a self-aggrandizing, clueless twit is spouting off that the sky was falling and it is time to "SELL EVERYTHING" [indiscriminately].
As I have been suggesting, when this shakeout of high beta and all growth stocks is over, it will be obvious that the smart money was pulling hedges off and getting longer the names likely to prove out to be the 2014 winners -- while those fearful of a China collapse (LOL) and fools were shorting the bottom. MPEL should be on top of that list.
Weekly charts are always helpful but have a look at a log chart for the last 100 days, setting your crosshair indicator at $35.50, and giving attention to the low of $34.43 on Monday the 7th. LOL
And note well the stock may yet retest the recent low. Lots of idiotic sell programs are bid slamming this week. We will be buying more...
We just covered the CAR short at $47.80 (a $4 pickup). So someone who can do 5th grade math can do the calculation our "adjusted" basis in HTZ, the hedge was dollar weighted. LOL
And to be clear, we think HTZ will soon be materially higher and are now unhedged. Those who are not clueless might understand that to mean we think the three week shakeout on high beta/growth stocks has largely played out now.
This car wash employee at HTZ thinks we need help navigating the current market shakeout. He's very concerned about our position and wants to give us advice? LOL While he continues to make a complete #$%$ of himself, we own HTZ at $22 since last November (dipS thinks we have owned it over a year at $27 if you read his numb effer posts), and we hedged out at $27.60 last Friday on the broad market rollover with a paired short on CAR (he has no clue what "hedging" even means.)
You can see why his work is vacuuming rental cars. ROFL
scalped up 90 cents this trip. LOL
joined the bail on dunkin as well...
We'll let you know when we get back in -- likely right about when gayboy redleaf says he's short again. ROFLOL