Read what I wrote again -- it is not what you suggest. To add more color, I think those numbers you threw out are far too high for calendar 2014. We'd be thrilled to see them get above $30m for calendar 4Q14 and doubt they will have any revenue in calendar 3Q14. Since the street is modeling the preopening expenses and interest costs but no model we've seen published, incl Bain's, has any revenue (gorss or net) modeled for CY 14, if they can hit $30m for MPEL's share of gross rev from Manila operations for this year (CY2014) or something around $25m/month ave GR (gross) for the property CY4Q 2014, that will lead to a consensus beat of at least a few cents cents/share (ADS basis).
Here's some more quant to chew on for the math/finance majors (LOL). As I have noted prior, the last time i saw Bain's model he had ZERO in his revenue modeling of MPEL's share of Manila for CY2014. Back in April he was forecasting ~$240m of ebitda for the property IN CY2015 which, adjusting for MCPs ownership % and then further haircut for the sharing between MCP and MPEL means a bit more than $80m of ebitda for MPEL's piece NEXT YEAR. Starting there and then adding in the recent budget increase, that will be driving ROIC of about half what they are doing in Macau -- so we think Bain's view of 2015, studied though we are sure it is since he is one of the few analysts in the sector that actually talks to mgmt and knows what he is doing modeling, is VERY conservative in that MPEL should not be willing to dilute their operating leverage like that for 2015 -- UNLESS they think they can materially outperform that level in 2016 and beyond.
Here's the easy reader 5th grade version of what i wrote above: We think the MPEL plan is to drive more than zero revenue for CY 4Q2014 and, if no more than Bain's forecasted run rate for 2015 (call it $80m of ebitda before expenses), about double that level as soon as possible. That is needed to rationalize the increased capital allocation there.
On the recent bs swoon hurting the macau stocks, MPEL got hit a lot harder than did LVS and WYNN in percentage terms, which was in part due to its outperformance last year and into January this year. Now that the nonsense of the weak sauce journalists and low quality "analysts" has been thrashed and will merit ridicule for years, the Macau-oriented group has begun recovering on the growth dynamic vs the global GDP slowness.
We expect that MPEL will continue to outperform the group for some time for several reasons.
First, MPEL is growing adj ebitda faster than any of the peers without footprint expansion and it does not have the U.S. venue baggage that WYNN and MGM carry. This stock needs to jump back above $39-40 just to get back in sync with LVS and WYNN!
Second, MPEL has COD Manila coming online for Golden Week in October. The street is carrying estimates for preopening costs, but we have yet to see even one analyst modelANY GR for MPEL for 4Q. They will have some friends... Note that LVS has its Singapore, but WYNN and MGM have neither venue under concession now or later.
Third, MPEL has the largest footprint expansion in macau over the next 18 months (Studio City Phase 1 and Tower 5). Following that and MGM and WYNN getting their second macau IRs open, MPEL will be opening the "expansion phase" of Studio City in Cotai.
Fourth, naysayers bs aside, Macau's GGR will quickly double again (in dollar terms even as percentage growth likely moderates on the "law of big numbers" and lack of land to build more properties) and propel the group valuations to new heights.
MPEL is up over 20% since the sharp reversal off the double bottom began on June 10. The sector is also rebounding now that everyone -- except for the clueless "journalists" still writing about the bs downsides and those who stayed way too late at the helmet party -- is figuring out that the stocks should never have gotten so beat up on a punchbowl full of bs.
Our floor estimate for Macau GGR is still 15% for the year, and our PT of $50 for 2015 (but as soon as during the week they announce Dec Q earnings) is now $2 above the consensus of $48 for the FTM period. Those who have been around will recall that 12 months ago we said, on the quick pullback from ~$26, that $21/share was a compelling chance to add before the stock ripped to $30+ or even $35 by EOY... then, as the stock blew past $30 we said $40 was possible by EOY and $50 by EOY 2015... forget history though, MPEL should once again outperform the market and group this year... manila will be up and going hard in a few months now (the street has zero revenues for this year) and Phase 1 of Macau Studio City will also open next year.
We think $50 will come up much faster than the naysayers can imagine. Betting on the downside anytime soon for this stock is likely to be a great way to create capital losses. LOL
Monthly Gross Revenue (MOP) from Games of Fortune in 2014 and 2013
Monthly Gross Revenue Accumulated Gross Revenue
2014 2013 Variance 2014 2013 Variance
Jan 28,739 26,864 +7.0% 28,739 26,864 +7.0%
Feb 38,007 27,084 +40.3% 66,746 53,948 +23.7%
Mar 35,453 31,336 +13.1% 102,199 85,284 +19.8%
Apr 31,318 28,305 +10.6% 133,517 113,589 +17.5%
May 32,354 29,589 +9.3% 165,871 143,178 +15.8%
Jun 27,215 28,269 -3.7% 193,086 171,447 +12.6%
and still, it seems, only the people reading here with at least a half wit -- and pals managing money with a serious allocation to this name (and now LVS after it got just too cheap) -- understand that a good chunk of why "mass" looks so strong ytd is that the smaller and less effective VIP operators have lost clients to direct credit "stay and play" relationships between the elite casinos and "premium mass"/wealthy patrons and their entourages.
Here's a macro I haven't commented on for over a month but is actually a key reason this stock (and LVS and even the sector for that matter) are poised to mash it 2H14.
In an investment world where U.S. GDP is flat in absolute and negative in real terms, Macau has both Manila Bay COD and Studio city coming online within 3 and 12 or so months, respectively, meaning that they have by far the largest percentage increase in footprint and adj ebitda coming of the four U.S. listed companies. And given that they "eeked out" (LOL) 30% revenue and call it 40% or so adj enitda gains yoy over the last several Q -- a timeframe without any footprint expansion for the company -- gee golly, d'ya think it might be possible that they will continue to dazzle with vastly superior growth vs the broader market? We and everyone who knows the sector and manages money understands that well.
Yeah... newbies and shorts might want to reread that.
Then, given that the majority of hedge funds (registered and exempt) have had a very tough ytd period (about half have flat/negative returns ytd) and soon more broad brush pm, including the likes of the new PIMCO allocation to MPEL, will start showing up as folks try to find the growth stories they will need to outperform the market. They will need that, in a big way, to drive additional capital and capital retention incentive comp for partners, pm, and assistant pm players as well as bonuses for their admn staff.
MPEL to the front of the line on that premier, quality growth and best in class mgmt.
Re my comment on June 25th:
"I know you remember what happened back in 2009, and then again in 2012 -- just as all the idiotic sellsiders in this sector lowered their ratings and PT (MPEL at $13, LVS at $38, etc) we suggested that guys actually managing real assets (vs a pissant trading sleeve for a hedge fund with drivel posting by interns and other HK tarts posting for 10 cents a post here with broken english)... within a year, the stocks had doubled or more. Here comes the next RIP"
So today along comes Shuli Ren, Barrons' weak sauce blogger who touts that she focuses on writing about "real time market moving news", quoting the bank saying this:
“Historically, Macau stocks started to [lift] when GGR growth hit the bottom (e.g. Jan 2009 and July 2012),” and June will be it. Deutsche expects gross gaming revenue in June to fall... the first year-on-year decline since mid-2009."
A lot of the bad news have already been priced in. Here is Tang:
"We feel the market is, by now, well aware that the World Cup is having a severe short-term impact on Macau, and that June GGR might fall 2-5% yoy (vs April-May +9% yoy). Last week, Macau’s economic secretary announced that, after July 1, jewelry shops on gaming floors can no longer add UnionPay terminals but existing shops can continue their business, at least for now. This should calm investor nerves in respect of policy risks."
Too funny, but to day Shuli, negative spinmeister that she is on Macau, can't resist trying to make more bs news by repeating the blithering nonsense from MS last week about all the bs "market moving news." D'ya suppose she might be getting comp for writing such stupidity over and over? LOL
One day soon all of these morons will realize they have been abused, but there is no way the central planners, incl Tam, are going to let the Golden Goose (gaming tax revenue) be hurt for much longer. The Vegas VIP news last week was a loud wake up call for Macau politicians and other bs broadcasters.
Recent chop and basing on option expiry against light volume and rebalancing are done now; PCLN's basing and retest on low volume is now on t-minus days.
Some may have noticed how the stock has kissed yet not seriously breached the 200d ema and that both it and the 50d ema have converged and now turning up again (LOL). Tape volume has been very light since the day after the OPEN deal was announced... that reflects all the institutions that want out prior to the coming lift have already sold out.
More? Retail and commercial travel is soaring these days -- the airlines' rasm, casm, load, ebitdar and eps data for the 2Q and increased guidance info is going to be stunning too. Do note the hoteliers and car rental agencies, the other big pieces of business for PCLN and the other OTAs, are also cranking. PCLN will be reporting record numbers this Q and the smart money is setting up for the blow out Q and ripping move coming.
Get ready to watch PCLN shares catch up with the recent move in TRIP and EXPE as PCLN relaunches to new highs over the next 20 days into the earnings and guidance update.
We know both Shuli Ren and the MS team are worthless in assessing Macau prospects and figuring out what is relevant to the individual company stories, but given all the now very public refutation of the stupidity and ignorance these people have diseeminated on behalf of hedge funds, it is unimaginable they would continue to spew such garbage. I'll pass on a lengthy stomp here, but a few quick notes to highlight the atrocity in Shuli Ren's latest dippy "real time, market moving news" -- even though she and MS again have it all wrong and the market now understands that. LOL
Shuli says "Among the Macau stocks, LVS seems the consensus overweight, for its exposure to the fast-growing, profitable mass market gaming segment." It may be that a handful of idiots think that, but no other company is mashing it out of the park like MPEL on mass and premium mass, adj ebitda and footprint expansion f18m from here. Additionally, MPEL is pure macau until they open manila -- the key part is MPEL does not have the deadweight of the Vegas strip and other U.S. venues, or the threats online gaming and increasingly ubiquitous casinos here are having on further Vegas gaming erosion.
MS ev/ebitda numbers must be leaving out out adj cash/ST investments; MPEL has alot now to build out Manila and Studio city as well as Tower 5 over the next two years. For real analysis of EV/ebitda and adj ebitda, see Bain's work. He understands and that is why his work shows MPEL to be the cheapest EV/ebitda stock in the group. did I mention lately MPEL's adj ebitda continues to grow faster (and their ROIC is higher) than any company in the group?
Dividend yields and int expense should not be in the relative value equation. MPEL will pay only a modest div/buybacks until the huge development queue isdone incl phase 2 of MSC. P/E is the same issue -- ridiculous way to assess mpel's value now as earnings aren't the math for the story. ROIC and ebitda math are it -- tho idiots do not get it yet.
The Motley fool article makes it sound like the Hyatt hotel is just now signed up to be built. Yet the exterior of the buildings are done and the interiors trims are being wrapped up, likely including the recent bump in the budget for the enhancements Hyatt wants done for their piece of the pie. But finishing touches aside, the property is on full steam ahead for the partner-confirmed target opening date of October 1, 2014 (start of Golden Week!).
The article also says the room count is smallvs Macau Studio city (he is apparently unaware of MSC having the initial phase and already working on the "expansion phase" design and plans), adding an upbeat spin to that by saying "but it's a start" and then adding the sidebar that there are other rooms there in Crown and the boutique. Yet all of that is miscued... COD Manila's three hotels (Hyatt Crown Resorts and Nobu) will have a total of 946 rooms, including 300 VIP suites. It will be spectacular and draw visitation from wealthy japanese, Koreans, and many Chinese from various regions in addition to other international tourists, gamers and business-oriented MCE business.
The best part the Manila part of this story near term is that with a couple of analysts and journalist suggesting "losses" will be coming from Manila when it opens, the reality is that preopening costs have already run some $75m (excl financing costs) for MPEL's share... but once it opens, revenues will mitigate that operating margin (and ebitda) drag. Even Sterne Agee's Bain (easily the best analyst in the group in our minds) has yet to incorporate and revenue for Manila yet this year... but read his last couple of updates shared by drjack here -- Bain knows there are some "upside" catalysts coming right up now for MPEL.
Owning the sector & MPEL since April hasn't been much fun for anyone who joined the chase higher on this stock above $38 on the double top, but barring calamity for Asia's economy, the next couple yrs s/b lots of fun for longs.
MPEL is up some 20% since the double bottom retest low on June 10.
PCLN is up more modestly... only 2.5% since my post... but it is about to get going hard in the runup to earnings, followed by a tear higher after that.
Love to see all the short tarts with interns "bashing" here -- more like showing their stupidity and ignorance, a darling combination opposite our thinking on PCLN (and expe and trip). LOL
see my reply to this guy's nonsense above... the stock never should have come under the siege it did... As I have suggested, barring an economic collapse not reasonably discountable except as severe left tail risk, the bottom is in after a way oversold condition... the reversal should be even more stunning as the real news begins being discounted again; it's already up close to 20% from the bottom as you know.
For us, the fun part is that every naysayer will be in disbelief as this rips back to $50+ when they report the Dec Q come next February... glad to have them on for the entertainment value.
Fun huh matrix? You called for an up $2 day a week or so ago too... nice. So here we rip to above $35 and the best part is that the stock has a huge runway ahead...
Here's the post matrix referenced re the knuckleball catcher's mitt -- the stock is up some 20% since the comment was made on the retest/double bottom low. LOL
"squeezetracker • Jun 10, 2014 2:43 PM
the group is bouncing... those who want to add might want to wait to see if those dumber than dirt can push it down to a retest of today's new low while some of us stand around with the knicleball catcher's mitts. LOL
We think anything below $35 is cheap vs what is coming for MPEL. Our PT remains $50+ Less"
So... as for the slew of Shuli Ren (Barons) and the sellsiders' nonsense "real time market making news", where is the update to say "As for all of our bs noise on Macau, please don't be mad at us, we aren't very bright and have no idea what any of this stuff actually means."
Here's an outline for a new update Shuli. LOL
UnionPay atm withdrawals noise? Over and done.
Visa noise? Over and done.
Smoking limitations? Yawn.
HSI has nothing to do with why this stock is going to RIP over the next several months into EOY...
And when important news hits in china (UnionPay bs fade to mashed into the pavement with the last of the idiotic shorts) 12 hours before our market is open, you can expect the U.S. markets to follow the move on the HK exchange.
As for the HK exchange, I have pointed out many times that the volume there is extremely muted... Packer and Ho's combined 68% ownership has not traded since the ipo), and anyone using that as a benchmark for anything simply doesn't understand... ands though typical volume is say 30-40k shares vs 3-4 M shares on the nasdaq, the HK total needs to be divided by 3 to have a U.S. ADR equivalent. LOL
As for you are going to "sell and then go short around 9:45? Ya, sounds an awful lot like you went short into last night's close. Nice trade... you must be the last of the Mohawkins [sic]. LOL As we are fond of pointing out, it is always fun to have "geniuses" opposite our thinking...
We are playing here for where the stock will be in February, but 3 minutes to go until your 9:45... ROFL
Yesterday the stock closed at $33.91, right on the 50d ema and up 14% from the successful retest of the double bottom low (notice there have been only 2 down days since and those were low vol tape vs the 50d ave) of of $29.76.
The second leg of the base drop undercut the prior low and is now looking like the recovery leg of a proper "W" with a buy point of call it $36.75 or so (some tech guys would suggest the mid point can be used as the pivot driving a buy point of $35.83). With just a little more mashing of the bs noise such as today's stomp of UnionPay nonsense, it shouldn't take long for a "golden cross" back above the 200d ema at $36.30 (the more important 40w ema is $36.70)... these levels may be taken out as soon as this week when everyone figures out that it is a Baby Ruth in the pool, not something no one would consider eating.
Of course, those with an eye on charts as an ancillary tool -- and primary focus on the most important thing about the MPEL story, adjusted ebitda, ROIC and expansion of the both of those overlain atop the biggest footprint expansion of the group f24m, have likely been adding on fundamental and quant analysis for the last couple of months.
Here's a big surprise (NOT) to anyone reading here with comprehension since March: the bs noise on portable UnionPay terminals in casinos is slain and over... and, from the big bad wolf/lions and tigers and bears dept, jewelers won;t be able to add ADDITIONAL cash withdrawal/atm machines. LOL
"Macau’s government banned jewelry and watch retailers operating in casinos from adding new card devices starting next month, adding to moves to regulate money flow in the world’s largest gambling hub.
While banks were asked to strengthen the monitoring of large cash and card transactions, the government hasn’t asked jewelers in casinos to cease operations or move out, Francis Tam, the city’s secretary for economy and finance, said in a statement yesterday.
The latest move follows a crackdown on the use of state-backed China UnionPay Co.’s hand-held card swipers within casino resorts amid concern that illicit funds are being taken out of the mainland into Macau. Shares of Galaxy Entertainment Group Ltd. (27), the casino company that helped make Lui Che-woo a billionaire, and those of Sheldon Adelson’s Sands China Ltd. (1928) surged today after the government’s announcement.
“Macau government clarified the policy on the use of cash cards, that it hasn’t asked jewelers to move out of casinos,” Steven Leung, a director at UOB Kay Hian Ltd. in Hong Kong, said by telephone. “It gives investors some degree of comfort to bargain hunt.”
Shares of Galaxy Entertainment rose 3.7 percent, the biggest jump since May 30, to close at HK$59.50. The stock pared its decline this year to 14.5 percent, while the benchmark Hang Seng Index has lost 0.5 percent. Sands China climbed 4 percent to HK$57.20.
Wynn Macau Ltd. (1128), the Macau unit of Steve Wynn’s Wynn Resorts Ltd., jumped 5.5 percent and MGM China Holdings Ltd. (2282) rose 3.7 percent. SJM (880) Holdings Ltd. climbed 3 percent and Melco Crown Entertainment Ltd. added 3 percent....
See full article on Bloomberg
As i said last week, we were adding on the gifting below $33... absolutely great to think these morons still think shorting GGR data, without any understanding of the differences and subtleties of VIP vs mass and what surging mass means to property efficiency and ebitda, is a good idea. Actually we love all the shares we;ve added down here below the 200d ema. LOL
The airlines, hoteliers and travel bookers (PCLN) are a similar story... all of those sectors are running full and at robust pricing, and things are only improving in business and retail travel... so, if you are a moron, you decide this is a great time to short companies trading at, near or w/airlines, at half the broad market multiples even though they are growing at twice or more the broad market in rev, ebitda and eps and buying in shares with both hands -- because they have the forward book and know things are going to get even better.
I know you remember what happened back in 2009, and then again in 2012 -- just as all the idiotic sellsiders in this sector lowered their ratings and PT (MPEL at $13, LVS at $38, etc) we suggested that guys actually managing real assets (vs a pissant trading sleeve for a hedge fund with drivel posting by interns and other HK tarts posting for 10 cents a post here with broken english)... within a year, the stocks had doubled or more. Here comes the next RIP...
The noise surrounding the sector would dissuade most pm (most of whom don't know much abouyt the sector except that it outperformed last year) from owning stocks that are perceived to be at risk of having their revenue growth coming down hard for the foreseeable future.
That is why all the hot/momo money left last Q as the solid sector pm added to positions between $37 and $45... it is also why the solid sector pm continued to add since then.
Yesterday the idiot analyst at WFC and others of late have suggested there are no catalysts to push these macau stocks coming until 2H14... but that too is as stupid as their collective drivel was about pushing the stocks down. As noted prior, the box hedging by the legit smart money is off and now new buys are adding to a 100% long position. Moreover, other pm who aren;t so dialed in and saw the big drops while waiting for an entry point are not listening to the idiotic analysts telling them there are "no catalysts".... the IMPORTANT catalyst for the sector, and ESPECIALLY MPEL, is that more broadly the street has now begun to figure out the entire premise for the naysaying and big drop was bs.
Yes MPEL's ebitda and adj ebitda is going to more than double, and, far less meaningful while the huge footprint expansion inManila and MSC and Tower 5 is underway, yes, eps will also soon soar... Simply, the bs noise is quietly -- and yet quickly, coming out of the shares, a catalyst in its own right as the stock is now up some 14% from the low last week. The bigger move is just about now too... the valuation will soon begin discounting what is coming, and all of the idiots who dropped their buy ratings and wet themselves over "lower entry points" coming will be the big joke laughed about by the pm who took advantage of all that funneled stupidity and media over the top of the poop pie.
precisely... with respect to GGR that is...
and then the house benefits from reduced concessions to VIP tour operators and players. The resorts have fuller occupancy, higher ADRs (think rack rate vs free rooms), full charge steaks/lobsters, drinks, champagne, bordeaux and burgundy vs all of that getting comp'd out, paying patrons for the shows vs concierge handouts, private jet transport vs folks coming in on commercial flights and ferries (soon it will be the bridge and rail system) and so forth...
Excellent and piecing view... it has all earned a little more mashing than that though, moving from "OMG... explanable slowdown..." to this:
"ummm... Now that the yahoo board posters and David Bain have explained what is going on about 60 different ways and times since April, we are beginning to understand just how stupid our running commentary on Macau, GGR, UnionPay, Visas, WC, VIP, China growth, shadow banking, banking system, credit to junkets, real estate, corruption and the other screams involving Macau's pending collpase has been. In fact, those of us with a half wit or more are just beginning to realize how badly the hedge funds have abused us and the pseudo-journalists "following" and writing about Macau and that we should all be hanging our heads in self loathing and disgust, but instead we'll simply try to put on a happy face and begin talking about how good Macau is for its citizens, tourism, tax revenues, infrastructure/development and the economic future of China and the Asia Pacific region."
Great post drjack -- thanks. Bain's work copntinues to be about the only seelsider with any relevance these days...
LOL the morons put on a daytrade short over the first three minutes of tape this morning, likely based on algo triggers for GGR last week and market share "pinch" -- without even uynderstanding what is happening in macau or with MPEL and that such metrics are at best errant and wrongway perspectives on MPEL. We quickly pounced on yet one more compelling chance to add while the "slaivating" opportunity lasts.
Now those same tarts get to chase this all day to cover at the smallest loss possible. They'll signal they are done shorting soon... they'll all be back to hyping the story once it is pushing back to new highs, yet unlike our view back in January (too much too fast), this time it will be sustainable as it is already time to begin discounting some of the pickup coming for COD Manila and MSC.
While we wait, fun to think MPEL has sufficient FCF to keep bumping that little dividend to finance Packer's cash needs at Crown Resorts and Ho's ambitions to set up the ok Corral in Russia through his other company so as to avoid putting his MPEL shares at risk on the political trauma possibilities there.