We have tipped out hat to Bain (SA analyst) several times for being essentially the only sellsider who understands MPEL's positioning and for being very dialed in, and, as longtimers here know, he has continually suggested a small common dividend was coming and congrats to him again. In fact, notable was the company's selection of him to be the first call on the q&a session... he has earned that.
Of all of his reports we have seen, here he nails the entire picture for MPEL and it is the most piercing look ahead he has shared. Most pointedly, he emphasizes how his ebitda estimates have been on top of street estimates and that the street has done little to incorporate the huge leaps forward on FCF once COD Manila and then Studio City (and Tower 5 COD Cotai) come online. As you know, we have been making the points in the prior sentence for over a year now, suggesting that a comprehensive understanding of these dynamics makes it obvious MPEL remains undervalued relative to the gaming group... and that eventually there will be some catch up for MPEL shares.
In 2013, a big piece of that gap was closed by relative outperformance of the shares... but as the others have moved hard of late, again MPEL shares are comparatively/relatively cheap. Fundamentals, quant and management execution all matter, and MPEL is the stock to own in the group.
p.s. Fun adding yesterday and even more fun to see some tug of war on the tape today... unhedged shorts are hosed as the box shorts are gently eased off (again).
We are aware of the genesis of this company… But dividends as the choice idea of "cash coming in from their investment" is myopic and unsophisticated. To the extent they want to receive capital distributions, a better idea is to do the buyback (increasing their ratable ownership) thus enhancing share value, and then redeem (sell minor shares) to drive whatever level of cash they want to derive… same is true for all holders obviously.
In the end analysis, and just a truism, although some dividend fund charters require a cash dividend to green light an allocation and thus regular dividends broaden the potential buyer realm, we think that is the only real justification for doing so. Otherwise, share repurchases are significantly more efficient from an after-tax roic perspective.
That said, as long as they continue to emphasize property development and AVOID issuing equity for same, a modest dividend speaks mostly to their confidence in forward ebitda sufficiency for development, operations AND ongoing use of debt and existing (equity) adequacy to fund the enchilada.
about that last sentence of mine...
Jumbled, but meant to say we wish they were coming with a share repurchase plan than a special and regular dividend program... think about buying in shares today at $45 (where the stock would have been if that was what they announced vs small dividends) and then issuing equity at $100 (if needed) in a 2018 years to fund COD Japan.
keep this on top so the unhedged short putzes know the score before the game starts tomorrow at 8:00.
We never read this board, let alone post on it, and a quick scan tonight reminds us that it is full of lame putzes trying to bash one of the best turnaround stories in the last 5 years...
If you can't process financial statements on your own, here's the takeaway: AIG's quarter was outstanding, the guidance set up is for ongoing beat and raise, last year's special/storm items are completely washed through now and the stock will respond will institutional buying starting about 10 minutes into the call tomorrow... and the stock will be at $65+ by year end.
there is no issue... pissant retail trade trying to paint the tape. If you want to sell, wait until during the conference call tomorrow when thestock will be printing up a couple of bucks from here. LOL
It really was a fabulous update... and sandbagged guidance is just that, setting up the next beat and raise.
The stock will trade up a couple bucks during the call tomorrow morning, and run higher during the day. Unhedged shorts can begin queueing up for the parade of short buses coming to get you all at 9:30 in the morning, right when all the huge buy programs are hitting the ask for the run higher.
And unlike the short putzes running their mouths here tonight, we actually know what we are talking about.
it's time to own aig... Shorts are roadkill -- see you all up a couple bucks tomorrow as the start of the next leg higher.
Lennar leading the builders up today... here comes the spring demand into low inventories, strong demand and increased availability of credit. Oh look, TPX is going with the builders... who'da thunk that?
BUILDERS GETTING GOING AGAIN... AND WHILE Jorcas and a couple of the new gnats here think tempur north america is soft and down 1%, he must not understand that every competitor had numbers down hard for yoy 4Q? Did he also miss the part that the Seally line did positive numbers in ALL market for 4Q? LOL
And as discussed on other threads here, Asia and Europe were up 4Q -- and those markets as well as the recovering No Amer market are all just getting going...
Did I mention the housing stocks are all lighting up again? TPX to $60 in a hurry as Bass and Einhorn pul the boxed short off.
You have been making similarly stupid comments about this stock since $35... YOU MUST ALSO HAVE LEARNING DISABILITIES.
We tend to play long and always enjoy finding new trading ideas, so what else are you shorting? ROFLOL
Would you buy a new S Class MBZ for $40k? The analogy to TPX at $30 is similar... you know, about buying something for about half what it is worth (in the case of TPX, assuming a reasonable multiple of normalized ebitda.
The problem you are going to have is that no one is going to sell you either one of these assets at such a ridiculous discount. So you are going to have to pay a bit more to cover in that little short of yours... and if you wait just a bit longer while the builder stocks all begin to reflect the spring activity ina market where supplies are constrained, presale activity is becoming the norm, and prices are rising with demand and availability of credit is about to expand... well pal, you are going to be paying significantly more than $50 for those cover shares. LOL
In my opinion, trying to trade this will short dated calls or the idea that one can out trade the market forces at work with 3m shares trading on a given day is a good way to lose capital over time... hedging is one thing; throwing dice is another...
We think MPEL will be materially higher as the weeks go by, but barring a global economic downturn or serious market correction (which would likely be caused by the former), we think MPEL is going to be very rewarding for those who own it this year. It is back to being our third largest position as of this morning, and we intend to be on it through the year now as the noisy dissonance from the CNY has already been dismissed, Macau is steaming ahead full throttle, and COD Manila and Studio City are on budget and on time.
Interesting to see the stock drift a bit... we know there are some unhedged shorts who are hosed from the 50d ema press twice... and we know the VIP play (vs WYNN) was a bit soft in what Ho said should be thought of as the "tricky" CNY timing impacts on January and now full throttle+ reversal in February, but we think the only place to find a legit critique of the Dec Q was the stunningly good premium mass hold. Again, listen to the call for mgmt's views on why they believe they can sustain outperformance relative to the sector norms, but a skeptic (and seller) may simply decide that using a normalized hold would imply the Q was only excellent, not stunning, so now is a good time to sell out the shares in hopes they can buy them back cheaper before the summer news flow on the February GGR and MPEL's likely continuing outperformance to be seen in March Q results (telegraphed by mgmt this morning) and Manila reignite the upside rip.
To those trying to press their buried shorts and anyone who is in the second cluster of possible sellers today, we'd just like to say thanks as it is letting us add shares cheaply relative to what is coming for MPEL with March results as well as the fanfare and robust lift on ebitda we'll soon see from both COD Manila and Studio City.
Beyond that, we'll suggest every analyst out there will be raising targets/pounding the desk on MPEL in coming days and as for today's tape, "the day ain't over yet..."
They were very careful in discussing the dividend, emphasizing that somewhere around 30% or so of FCF fits in their forward thinking, but that they will guard flexibility and do not want to be locked into gearing... they well understand that borrowing money or, worse, issuing equity to fund forward development will be punished and so whatever they pay out in dividends needs to be conservative and below those key thresholds. We come out comfortable with their framing on dividends, but we far sooner see them using the "extra, unneeded" capital to take out shares at present levels, which we think will prove to be very inexpensive compared to where they are going over the next couple of years.
Apparently a lot of the buyside was listening to MPEL's comments on the call. These two points likely went noticed by pm other than just us...
"We also focused on two other points. First, none of the Asian analysts (or Bain) expressed any concerns over China's economy and banking/shadow banking system. Second, listen carefully to what they said about combining Jan and Feb to look past Macau's GGR results for January... and note the commentary that CNY book is significantly better than last year and that already the VIP and premium players are returning to Macau and that they are very please with the prospects for further progress this year (even before Studio City comes online). "
If I were trying to find something to quell our enthusiasm for the shares, I'd focus on mass hold being so superior... but their comments on the subject, including sustainability, were brilliant, as was Ho's inclusion of his players.
We also focused on two other points. First, none of the Asian analysts (or Bain) expressed any concerns over China's economy and banking/shadow banking system. Second, listen carefully to what they said about combining Jan and Feb to look past Macau's GGR results for January... and note the commentary that CNY book is significantly better than last year and that already the VIP and premium players are returning to Macau and that they are very please with the prospects for further progress this year (even before Studio City comes online).
We smiled to hear every analyst congratulated mgmt on a superb Q. They should have! One of the last analysts on the call (Citi I think) suggested that he thinks the Q was "great, really great job" and that they have consistently delivered outstanding results for the entire three years he has followed the Company. Anyone reading our posts over that same timeline knows we have the same view.
We are not advising anyone here, but longs should consider listening to the call before selling out any shares. We are adding this morning despite the tough broad market tape painting, and we are quite certain the box hedge shorts will be coming off as gently as possible over the next couple of days. Those pm who were careful to protect the bump up from the double bottom retest of the 50d ema are sophisticated enough to understand they don't want that offset to the long on rolling forward.
the U.S. tape painting premarket is tough, and i doubt we'll see $50 (our initial PT for 2014) today, but these results are outstanding and everyone following this company with quality fundamental and quant valuation metrics will be raising estimates of ebitda and operating leverage on the data set shared this morning.
As for the comparisons to TSLA? Hyper momo valuations have nothing to do with present valuations accorded MPEL. MPEL is a story about stunningly good mgmt execution, ideal company positioning in a protected growth market, and major new footprint expansion on the very visible horizon. And MPEL's fundamental and quant work will lead the buyside -- and the sellsiders -- to the view that it is still very erly in the MPEL story and the stock is actually cheap on a relative basis... far away from hypervalued.
TSLA has its S coupe and is coming with a car for the masses... but soon the new MBZ, BMW, Lexus and every other performance car maker is going to stuff the dreamy growth aspirations TSLA's cult sees for the S model, and GM, F and all of the japanese makers will be gunning for share vs the new small sedan TSLA has in program... We'll guess these fundamental and quant valuation parameters will soon matter for that stock, but don't tell the cult -- they are right out there with the Heaven's Gate green koolaid folks.
We've been discussing this mgmt's superior positioning and execution for three years, but the Dec Q and commentary regarding the CNY and outlook being superb really are stunningly good.
Those who have read our comments over time know we have not expected a dividend anytime soon based on historical mgmt posturing and development financing needs for Manila and any new properties coming outside of Macau over the next few years. so we are surprised to see them come with a special dividend and working to craft the words to say they want to have some modest regular dividend policy. The latter, they say, will need to carefully balance needing to preserve the flexibility to pursue "growth outside of Macau" with the delightful circumstance that ebitda has improved faster than even we thought (which has been above street numbers for the last 6 Qs) AND they think that substantially growing ebitda will continue to sustainably grow (i.e., even beyond the obvious footprint expansion, they are talking about additional operating leverage in Macau).
Superb Q and brilliant mgmt execution... WOW!