Longs ought to listen to the replay if you missed the call just now, but this conference call handling was excellent with great updates on many important aspects of this company's future.
1. Mkt share: Taking share across the board: mass, RC (VIP) and machines.
2. Record Table drop and machines at record levels at COD Cotai.
3. Altira: has had many VIP rooms offline during repositioning effort to focus on the biggest, quality junkets, but they will all be back operating as of next week. Sun City is ready to go there now, and another large operator (no announcement as of yet) will make it 3 of the 4 largest tour operators doing business at Altira now, with 2 all new salons. The naysayers can't figure it out, but those bringing legitimate (non-crooks) in on quality tours in compliance with all applicable rules/screening/funding sources are continuing to play in Macau, and MPEL is taking share these days.
4. Studio City Tables -- Expect to get at least 400 tables, optimal is 500, but if less, "as licensee" (says Lawrence) they can still move tables from other locales, but the comments about MPEL shareholders first tells macau officials they need to be "fair and reasonable" to avoid crimping style for SC. In other words, MPEL will continue to focus its table allocations on its 100% owned properties if forced to allocate them within all of its properties. See #5 below.
5. "Diversification and Other "Tickmakrks": Ho explains here why SC offers up more "tourism/family entertainment diversification than the rest of Macau COMBINED." Makes the clear case MPEL should do as well or better than any other company on getting tables for SC (not mentioned was Phase 2 in the balance).
6. Macaunese People Development: Big tickmark here. Says LT retention plan was a smash hit vs ST bonuses and that MPEL is developing its employees and has excellent relations with them and the "happiest employees on Macau." Says not concerned about finding new staff for needs.
As noted many times here, unlike the HK shares for the other U.S. listed gaming companies, the MPEL listed shares essentially do not trade any volume there in no small part because Lawrence Ho and Packer (co-chairmen of MPEL) control 68% of the shares through their separately owned companies -- and essentially all the remaining float is institutionally owned and traded as ADS shares here. This dynamic is manifested in typical daily volume of the ADS equivalent of less than 15,000 shares...
Still, good to see all of these companies shares rise 2-3% today on the strength of Chinese construction companies and banking names running as Beijing moves to stimulate lending, real estate and international and regional commerce. Bloomberg has several good aeticles on these topics this morning.
MPEL shares have rallied almost 20% since the July 2013 low rejection last week as discussed on my recent thread on the topic. The stock danced around the 50d ema at $25 yesterday, and the 200d ema is down below $31 as the fog begins to show signs of lift again in China... all of that on top of no negative surprises from Xi Jinping and was obviously understood to be good news last week as hedge programs came off contemporaneously with MPEL buying back more than $200m worth of shares.
Better days ahead for MPEL and the other Macau names as all the bad news is known and has been repeated 700 or so times... and the pendulum shift to a good news cycle is now overdue in 2015.
Merry Christmas to all of the quality guys and your families!
7. Midterm Review Process: Lawrence explains why they are looking forward to the midterm review. Thinks MPEL will come through the review with "flying colors and at the top of the group based on MPEL's involvement to diversify Macau, develop its people, engage/db with and encourage growth of local establishments, comply with all applicable rules, laws and governmental directives.
8. Best in Group EBITDA 9relative to footprint): Despite low holds and slightly lower mass hold (win rate) on table games vs PY, MPEL's COD ebitda was over 85% mass, and ignoring that some of Altira offline for repositioning and all of the noise/corruption crackdown, over 80% of overall ebitda was mass/direct credit play. That reamins best in the business on Macau.
9. COD manila: Ho said this is going very well and he's really pleased to have the "exciting, transformational COD Manila" opened now and looking forward to sharing the early results on that on the next call.
I'll share more later, but listen to the call before selling any shares at these ridiculously discounted levels.
Macau's new finance chief, Leong Tac, just shared some BIG news for the two new "casinos" opening on Macau this year. This is all entirely consistent with rapid approval/permits given to LVS last week and a very public acknowledgement that it is time to get back to business in Macau. As for 1H less growth rate than last year? Known and old news -- last February's yoy comp was 42%, and Xi Jinping's arrest of Zhou (i.e., severity of "crackdown"/going after political enemies) was not known until last week of July -- and still ~80% of VIP continues (ex the weaker small junkets and questionable/squeamish players to be sure). Further, Jinping's visit is over (no damage done) and the CNY celebration crowds will be there next month, with this "golden week" ex the Hong Kong umbrella distraction.
GGR recovery to start in 2H2015 at earliest: Macau govt
Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac (pictured) on Friday said that the city’s casino gross gaming revenue (GGR) was unlikely to return to year-on-year expansion until the second half of 2015.
He called the ongoing downturn “an adjustment period”.
Mr Leong said the GGR decline was “positive” as it could give the industry breathing room to promote a more sustainable development model for the long run.
“Because we are now facing an adjustment period in the gaming sector, we don’t expect casino revenue for the first two quarters of 2015 to be similar to the same prior-year period,” Mr Leong said in comments broadcast by Radio Macau.
He added that growth could return in the second half of 2015, triggered by the opening of new casino developments on Cotai. Still, Mr Leong called for “prudent” expectations.
Macau’s two 2015 openings – both officially scheduled for mid-year – are Galaxy Entertainment Group Ltd’s Galaxy Macau Phase 2 and that for Melco Crown Enterainment Ltd’s majority-owned Studio City.
Mr Leong declined to provide estimates for GGR performance in 2015.
Barron's (NOT Shuli Renn lol)
Gaming revenues hurt by corruption crackdown, but worst appears priced in as new resorts drive earnings growth.
Fortune has not smiled on Macau’s casino operators in 2014. The red-hot winning streak enjoyed by casino stocks in the only place that gambling is allowed in China has been brought to an end by Beijing’s crackdown on corruption and extravagant spending.
The reversal of fortune has been stark. The Bloomberg Macau Gaming Market Index advanced a staggering 100% in 2013, but this year the gauge has tumbled around 40%. SJM Holdings ( 880.HK ), whose Grand Lisboa casino is the tallest building in Macau, has been the worst performer with a 53% decline. The unrelenting drive to quash corruption and extravagant spending has stemmed the flood of gamblers keen to test their luck at the tables. The architect of the crackdown, Chinese president Xi Jinping, arrived in the special administrative region on Friday for a two day visit to celebrate the 15-year anniversary of the handover of Macau to China.
But the misfortune that has plagued Macau’s casino stocks may be the opportunity that risk hungry investors have been waiting for. Investors that have sold their positions in the big casino operators have expressed concerns about the drop in the number of deep-pocketed VIP bettors visiting Macau. It is little wonder investors are downbeat, as slower growth in gaming revenue at the start of the year has transformed into an outright decrease in gaming revenues as 2014 draws to a close.
However, Macau’s casino industry will not be as reliant on these big spenders over coming years as it is commonly perceived. Analysis by Goldman Sachs shows (cont)
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...
As noted a few times here, this stock won't be a "chart buy" until the stock crosses back above the 200d ema on heavy volume, but the chart is suddenly looking constructive for those who can process what I wrote last week about the successful retest (rejection) of the July 2013 low last week -- not just for MPEL but also LVS and WYNN as noted then. These shares are up some 14% since as the buysiders pull hedges on the difference between "illicit money transfers" and Chinese law compliant VIP operations/money transfers and the quality/texture of Xi Jinping's scripted remarks endorsing Macau and encouraging further diversification. Those who are dialed in to MPEL's business plan and "best in group diversification of offerings" of Macau's Integrated Resorts understand MPEL is accomplishing Beijing's objectives better than any other operator on Macau; the cinematically-themed Studio City (phase 1) will be further transformational for MPEL, almost doubling MPEL's room count on cotai (and macau for that matter) and quickly become the pedestal example of new world order diversification.
More excellent news on was filed on the ongoing buyback program to reflect additional buyback activitiy on Friday. While Jinping was at the microphone, MPEL took in another 836,012 shares, bringing the cumulative total to 8,105,534 shares (ADS equiv) purchased over the last consecutive 11 days in a row. Great to see the two co chairmen/billionaires controlling some 68% of the outstanding shares make this statement about the future of MPEL and its stock... on top of the ~$100m repurchased last Q around $27/share, so far this Q they have invested another $200,000,000 of recent ebitda in the discounted shares....
Lucky 8s.... LOL
MPEL continued the string of consecutive daily buybacks yesterday (12 days in a row now), adding another 403,260 shares thus bringing total buybacks this quarter to 8,508,794 ADS equivalent shares.
As noted above, very sector knowledgeable "smart money," including the guys running this company and owning 2/3s of it, are gobbling up all the shares people will sell down here... and still they have roughly $200m of authorization remaining on the initial $500m buyback plan.
Good to see them make this statement about how they feel about trading at the lowest fwd ebitda multiple since they started the company, particularly given the Macau room count will almost double and between that and the COD Manila rooms opening right now, MPEL's footprint (room count) will increase a total of some 140% between now and August.
Leung Tac, the new finance chief, is not alone acknowledging that Macau's future will remain primarily about its "special status" as the only legal gaming venue for China.
The chief exec from Macau in his annual report to Beijing and also China's second most powerful politician, premier Li Keqiang, have made it clear they understand gaming resorts are Macau's reason for being so prosperous and important to Hengqin and surrounds. Seem they are intent on keeping Macau going and striving for "modest diversification" too while remaining mindful that Macau is pricipally about gaming and traffic for Hengqin. Excerpts below from the comments in Beijing last week... my favorite was the parts about "promote moderate diversification" and later "appropriate diversification" in Macau. MPEL best in class on that score with HOD and Studio City IR coming soon.
"Chinese premier voices support to HK, Macao development
Premier Li Keqiang on Friday pledged continued support to the governments of Hong Kong Special Administrative Region (SAR) and Macao SAR when meeting with leaders of the two regions.
Leung Chun-ying, Hong Kong SAR chief executive, and Chui Sai On, Macao SAR chief executive, were in Beijing to report their work in 2014 to the central government...
When meeting with Chui Sai On [Macau chief exec] separately, the premier praised what the SAR government has done in the past 15 years and urged them to seize new opportunities and promote moderate diversification of the Macao economy.
Leung said the Shanghai-Hong Kong Stock Connect scheme enhances Hong Kong's connection with the mainland and boosts Hong Kong's financial sector. He vowed to develop the economy, improve the quality of people's lives and push forward the development of the region's political system.
Chui also thanked the central government for its support of his administration and vowed to improve the livelihood of Macao people and work hard for an appropriate diversification of Macao's economy."
Some new joiners to the "turn is here" parade -- 5 published reports this saying that things are now on the mend in Macau and china citizenry sentiment on the economy is improving.
BBN issued this article too.
Jan 27, 2015
Macau casino shares jumped in Hong Kong trading after gaming revenue in the world’s biggest gambling hub gained last week, which analysts took as a sign the industry may be out of its free-fall of late last year.
The industry’s gross gaming revenue for table games rose 6 percent for the week ending Jan. 25 from a week earlier, which “could further indicate stabilization” after President Xi Jinping’s Macau visit last month, Bank of America Merrill Lynch analysts led by Billy Ng wrote in a note. The measure still fell 7 percent compared with a year ago.
Xi’s visit coincided with government efforts that included plans to crackdown on illicit funds funneled through Macau amid his anti-graft campaign, leading to seven straight months of declines that peaked at a 30 percent plunge in December. Union Gaming analyst Grant Govertsen upgraded the sector to a buy rating yesterday, writing that evidence is mounting “that we’ve finally reached the bottom,” and Macau gaming names “are poised for a rally”.
Shares of Wynn Macau Ltd. (1128) jumped 8.4 percent to end at HK$21.90 by the close of trading, the biggest increase since last April. MGM China Holdings Ltd. (2282) and Galaxy Entertainment Group Ltd. (27) both gained 6.5 percent, Melco Crown Entertainment Ltd. (MPEL) was up 5.6 percent, and Sands China Ltd. (1928) increased 3 percent. The benchmark Hang Seng index fell 0.4 percent.
The Bloomberg Intelligence Macau (China) Gaming Market Index slumped almost 40 percent last year, amid policies that included restrictions on the use of UnionPay’s debit cards at casinos, making it harder for bettors to buy pricey items that they exchange for cash to gamble with. The index closed 1.8 percent higher yesterday, and gained a further 5.9 perce
February 16, 2015 8:13 am·
hotelviewAccording to the information revealed by the head of the Philippine Amusement Gaming Corp, Cristino Naguiat, the local gambling sector is going to experience further development and become even more competitive on a global scale.
What made the PAGCOR official so convinced of the revival of the Philippines’ gambling segment was the increased number of VIP players attracted by the junket operators.
The chairman of PAGCOR expressed his hopes that the local gambling sector is likely to undergo “another double-digit growth”. Apart from the success achieved by junket operators another key factor for the rapid growth of the casino industry is the opening of the mega resort City of Dreams, managed by Melco Crown Resorts Corp.
An important specification has to be taken into consideration, though. Despite the optimistic prognosis, the Philippines gambling industry is not as well-developed as the Singaporean one.
However, it is developing with a tremendous speed, while the neighboring gambling hubs keep reporting problematic revenues and decline of players.
In comparison, Macau-based casinos have been reporting decline over the last couple of months, while the Philippines reported an increase equal to 16% YOY.
In addition, the VIP and the junket players visiting the Philippines-based casino venues increased by 50% in one year.
Despite the fact that the Philippines casinos are thriving, while the majority of neighboring venues are declining, it does not mean that the venues are going to operate without being pressed by the competition. It is a well-known fact that the South Korean and Vietnamese gambling markets are fast developing as well.
Yet, City of Dreams Manila is expected to make the region a well-attended and appealing to players in spite of the rivalry.
The expectations for the next few years are the gaming revenues to go beyond US$4 bi
goog title for yesterday's L A Times article and photos of COD -- this thread was deleted too? great service this yhoo. LOL
If your idea of a "dream city" includes a massive gambling casino, a Nobu Hotel and nightclubs developed by Michael Ault, head to the Philippines.
That's where you'll find City of Dreams, a casino-entertainment resort created by Melco Crown Entertainment in Manila that opened Tuesday. Fireworks, celebrities (Kelly Rowland and Ne-Yo walked the red carpet) and high rollers of the corporate kind welcomed guests to the new $1-billion site.
Ne-Yo performs Tuesday at the opening of City of Dreams Manila. (Graham Uden / PR Newswire)
The mega-casino's sleek glass towers surround a huge golden egg, called the Fortune Egg, which creators hope will become a city landmark.
City of Dreams in Parañaque along Roxas Boulevard is part of a much bigger Entertainment City that's intended to go up against popular global gambling venues such as Macau, Singapore and Las Vegas. When completed, it will feature four casino complexes.
The Wall Street Journal reports that the Philippines' gaming agency predicts gambling revenues of $10 billion a year by the end of the decade -- outpacing Las Vegas and Singapore.
Back to City of Dreams. The egg will house two nightclubs, Pangaea (there are several, including one in Singapore) and Chaos.
There's an entertainment bar with live performances on the casino floor, three hotels -- Crown Towers, Nobu Hotel and Hyatt City of Dreams Manila -- and dining options from Nobu as well as the Crystal Dragon, which specializes in Chinese dishes to woo top gamblers from China.
Shopping runs to luxury brands such as Hugo Boss, Montblanc, Rolex and Roberto Cavalli. An interactive entertainment play space designed by DreamWorks will open later this year.
Info: Dream City
Two more points...
Even dismissing the offline/refurb parts of the WYNN property down on the Penninsular (they have no Cotai property until the Palace opens mid 2016 they say now) ,those with a little bit of comprehension of the difference between WYNN.LVS and MPEL's business plans and execution last year certainly expected WYNN to fare poorly vs LVS given that the vast brunt of the GGR drop has been from the smaller junkets getting clobbered out of business or going where they have less scrutiny over their operations and clients, and the chilling effects the noise and corruption crackdowns on macau have had on VIP play there.
On this note, MPEL's COD on Cotai is the only company that ran at 100% occupancy throughout 2014, with a 30-40% average turnaway rate. We also know they have continued to further de-emphasize VIP at COD, meaning that the VIP slowdown has crimped MPEL's overall revenue and, far more importantly, overall ebitda far less than WYNN and even LVS. Old news, but MPEL likely ran on the order of 90% of its ebitda from mass and adjusted (for smoking rooms) premium mass play (direct credit players).
Looking forward to more color on COD manila come Thursday too... Ho has said a few things the analyst community is not yet taking note of, including that COD Manila is "already exceeding our expectations" and that he expects Manila overall to exceed the Philippine gaming regulator's forecast of GGR for 2016 and that COD Manila will add more than another 1/3+ to that baseline forecast. Do your own math on what that means to MPEL, but if Ho is correct, every analyst out there will be increasing their estimates for COD MPEL before long...
host deleted the original post without a link? goofy
Goog title in quotes to see a great article from bloomberg discussing why MPEL's billionaire CEO and his co chairman Packer (another billionaire) are telling the world COD Manila is poised to be a whole lot more successful than the street is modeling so far -- for 2015, but particularly in 2016.
In the article, Ho shares that he thinks MPEL "could get to profitable this year" (2015). That is big big news for MPEL. Those doing any kind of modeling should begin to figure out that means they see significantly more ebitda than any publishing analyst is modeling for Manila, as that means they see sufficient revenue coming to cover non-cash items, the big opex number and debt carry as well as gaming taxes and the partnership sharing. Ho also shares the brightening framework for what he thinks the property can do for 2016... great stuff.
For longs, it should be fun to hear some details on this topic on the earnings call update next week .
Also see the new articles from the LA Times and the Manila paper today. Great stuff about: "it's more fun here" [in Manila because taxes are significantly less than in Macau, says Lawrence.
However, Macau’s casino industry will not be as reliant on these big spenders over coming years as it is commonly perceived. Analysis by Goldman Sachs shows that while 56% of gross revenues in 2014 are expected to come from the VIP segment, which is most affected by the crackdown, only 22% of earnings before interest tax, depreciation and amortization (EBITDA) will come from this segment. Goldman expects that by 2016 less than 50% of revenues, and 16% of EBITDA, will come from the VIP market.
The expansion of ‘mass market’ gambling is likely to underwrite the earnings growth of Macau’s casinos. Many operators have adopted a ‘build it and they will come’ mentality by increasing the number of tables aimed at everyday players in the hope of attracting more Chinese tourists to visit Macau. Despite the cool chill of Beijing’s crackdown, the number of Chinese tourists visiting Macau grew 11% year-on-year in the third quarter.
The bid to attract more mass market players means an evolution in the experience that Macau will offer gamblers over coming years. This will see Macau become more like Las Vegas by developing integrated resorts, where customers can not only gamble but also enjoy other forms of entertainment. Eight integrated resorts under construction will double the casino operator’s hotel capacity over the next three years, according to Bloomberg Intelligence. The opening of the Hong Kong–Zhuhai–Macau Bridge in 2016 will connect Macau directly to Hong Kong International Airport, while the expansion of border crossing operating hours, with the eventual goal of 24 hour border crossings, could help grow visitor numbers.
Henqin Island, in the Zhuhai Special Economic Zone and directly adjacent to Macau, is also ramping up non-gaming attractions which should draw more visitors...
bump for those who missed Leong Tac's perspectives in this seminal article...
good to see this guy off to a GREAT start in terms of understaning Macau's "special edge/competence (gaming/leisure) and intellectual approach to encouraging development of more diversified offerings such as MPEL's Studio City and House of Dancing Water at COD.
Consistent with their comments from last week and the raise of rating/PT on MPEL Monday, today MS emphasizes the 2H15 GGR "recovery" theme (on Galaxy 2 and MPEL's Studio City (phase 1) openings on Cotai Studio) and WYNN's new Palace opening in another 15 months and so raises WYNN back to buy and increases the PT to $190, saying the stock is stupid oversold and #$%$ cheap. Who'da thunk that? LOL
As with MPEL's Packer and Ho view demonstrated by the serious share buyback activity (2% of outstanding shares in December alone on top of the 1% taken out at ~$27 in September) and the slew of 13F filers adding during the Sep Q and on through today, we agree with MS coming out of the naysayer group they joined (dropping their BUY rating and PT) in late July. LVS is cheap too, even MGM is cheap --but not compared to the MPEL, WYNN, LVS order on ebitda metrics.
For those worried about our trades (LOL), including the guy we know using 10 aliases to thumb his posts up and others' down, we blew out the LVS trade; MPEL is the only allocation again pending the 4Q updates.
Now you sound just like matrixputz. "Promoting?" Is that what suggesting some might want to sell or hedge some or all of their shares at $43 last january was? How about reloading the trading allocation at the $37-38 level for the run up into the double top retest in march where I explained why we sold out again there?
Your comments are thin here toast... I'm not "promoting" anything, more at sharing perspective with respect for all but those tools trying to dis me -- they deserve their share of kicks to the face.
fwiw, I have yet to cover the MGM hedge... there is lots of room for market chop, and anyone who has concerns about the downside here should have been hedging or sold out long ago. Down here, it is time for spec capital to get back to long or add to positions -- unless you think Xi Jinping wants to turn Macau into a ghost town ala Atlantic City... his new finance minister being sworn in on Friday has a far better outlook for Macau and its "edge" if you have been doing some remeidal reading shared here.
goog title without the quotes for the PR video aired yesterday.
Then, goog the title below for a piece on some of the Grand Opening entertainment yesterday.
IN PHOTOS: Ne-Yo, Kelly Rowland in Manila for City of Dreams launch
From the forbes article:
"Melco Crown Entertainment’s City of Dreams Manila expects to open the world’s first DreamPlay theme park, featuring DreamWorks characters and settings later this quarter“...
Sands [LVS' Macau sub] is building a large theme park too, though the forbes article gives air to the view that Macau is and always will be, first and foremost, a gambling mecca as Leong Tac (Macau's brand new finance secretary) as said in so many words a few times. Whether politicians from Beijing like it or not, as commented here prior, Macau is never going to be a dancing elephant in a pink tutu. LOL
"Planet J forecasts it will attract 3 million visitors during its first year of operation. We’ll see. While visitors such as CMRG’s Rein complain about the lack of family entertainment or more broadly about Macau’s lack of non-gaming attractions and Macau and mainland China officials talk about diversification, resort operators say they’ve learned the vast majority of visitors are interested in gambling and little else.
The operators may be right, or it may be that be that they simply haven’t found the right non-gaming attractions yet... Planet J is a noble experiment at a time when Macau, with eight straight months of falling revenue in the books, could use some magic."
We'll see is right, but good to see that LVS (with Circle J) is now piling on with MPEL (at both COD and Studio City) to give "diversification" a legit investment. If you missed the MPEL CC, give a listen -- as Lawrence said on it, Studio City is going to have more [legitimate] diversisfication/entertainment attractions than the rest of Macau properties combined... and that is on top of COD's HODW and the Dreamworks "Theme Park" noted above.
The CC also covers rumors rumbling that the "first new resort on Cotai this year [i.e., Galaxy's huge new casino property] will get only a "light table allocation." Perhaps Galaxy needs to follow MPEL and LVS' lead with other "attractions" for patrons.