agree with Jim...
Great comments on COD manila...
And really confirming comments from the JPM analyst team wrt Macau VIP:
"Triggered by four consecutive months of decline in gaming revenue since June, prices of casino gaming stocks in Hong Kong have dropped by 37 percent on average from their respective year-to-date peaks, according to the brokerage.
The downturn however “is not structural”, said J.P. Morgan.
It added: “Taking a step back, we note consensus earnings estimates for six operators came down by US$1.2 billion from the peak (down 11 percent), during which time the sector lost US$70 billion in market cap (down 37 percent). In other words, we believe it was more the uncertainty and fears on the outlook, rather than the magnitude of slowdown itself, which caused a correction.”
The brokerage sees a recovery in Macau’s gaming industry starting in the second quarter of 2015. “Macau … will likely enjoy the best ‘profitable’ growth from secularly rising Chinese mass, and we forecast the combined EBITDA [earnings before interest, taxation, depreciation and amortisation] of [the] six operators to double by 2018"
This is the most legit recap of what happened to Macau VIP and why -- and where things are going -- than we have seen since May from any sell side firm other than Bain. As conviction/visibility improves, long before the ebitda double is historical, the stocks will begin forward discounting of that progress on a corresponding vector.
thanks... good post and quality insights as usual
As you know, the "measures taken by the Macau government to limit the number of gaming tables in September 2011" are not mandates or even law/legislated rules, they are "guidelines" local officials have used to muscle their objectives of spurring "diversified" offerings, and, as seen here, to promote economic development and jobs wherever they see fit.
It is also a simple truism that the "tables limits" guidelines have never been enforced and likely never will be... but for all of the noise on diversifying Macau's economy, Beijing and Macau govt officials all understand that gaming is the lifeblood of Macau and the surrounding economic development... impairing the "Golden Goose" that GR represents in any way would be incredibly shortsighted, especially since the land bank in cotai is now entirely committed.
Fair point to be sure... to recast what I wrote, the starting point is that even at Steve's "nadir" of VIP, still some 75% of peak VIP GR is being wagered.
Who is still playing? Let's call that "an open question", but we know those who have either taken themselves out or are sitting in prison or "State detention houses" (e.g., big wigs Zhou and Chen recently in the news) are going to any of Beijing's or Shanghai's ultra lux "private clubs" these days, nor are they making any under the table -- or over the table -- "deals", nor are they gaming in Macau (or anywhere else). Dare other guys who are the next Xi headline targets playing? Doubtful...
The questions of just how many "legit business people" [with elite wealth and a propensity to recreate with gaming in Macau] and how long does the chill effect last remain, and the unanswerable part about what will it mean to future VIP GR and premium mass and mass remain for now. Thinking through the macau piece, what if VIP is cut in half from the 75% level, and what if forward growth of mass GR is more directly functional to rooms desired by those coming to macau? The heady growth curve overall may be gone in those circumstances -- and only a small handful of companies will be the beneficiaries. Shel and more importantly Steve seems close to sanguine for now -- but in this new world order MPEL to the fore "shaping the future of Asian gaming"...
Is it president Xi or premier Li coming? We have seen several references to Xi (corruption crusader), but none to Li coming for the Portugese turnover celebration...
As for the lingering impact on conspicuous spending in the form of junket players, it may be that the crimp is longer lasting and more severe than anyone has contemplated to date... yet still we have better than 75% of last year's VIP GR happening, right in the teeth of the worst of it. One can begin to surmise that corrupt officials and their developer pals building bridges and highways and govt buildings are not playing anymore (the guilty parties not yet hurling themselves off of tall building and those that have met that end?) as well as anyone who is afraid their past dealings can be construed as out of bounds by Xi's review standards everyone in the gray zone now understands? For all of these guys and anyone else who has been part of Xi's targeted "private club shady dealmaker" crowd just laying low these days, they may never be back.
It seems likely, however, that those playing on junkets that have continued to come will continue to come when everyone else dares to come out of their foxholes... meanwhile, all the direct credit guys who have access to money/financing apart from the mainland continue to play with conviction as seen in WYNN's and LVS' numbers now on file.
Meanwhile, we know MPEL's VIP is less of their mix than any of these other companies, incl LVS... and it is let's say highly likely that MPEL continues to get more than its own share of repeat customers... that reality is in the market share numbers -- more clearly through Sep and Oct to date than ever before.
All considered, we were pleased to see WYNN come in as strong asthey did. MPEL s/b materially better YOY on mass/ebitda/adj ebitda etc... and Steve can tout paradise as "diversified IR" -- but other than the big lake, it will pale vs COD and especially Studio City on that score.
you've said that a few times now on this board... You really ought to read the IBD article I am referring to. After that, go back and read my comments again so you have an idea of what I was talking about here.
As for casinos all over the place, including the Indian reservations, there have been casinos in all but 5 or 6 States for years now, and certainly that proliferation has eroded the one time gambling mecca that the Strip represented here in the U.S.... but that has absolutely nothing to do with Steve Wynn and MGM and LVS flying in China's VIP players in May and June when tables games soared to better than 30% YOY growth in Vegas (was THAT because of the casinos popping up everywhere?) and, contemporaneously, all the idiotic analysts (i.e., excl Bain and a couple others who do add value) began touting "Vegas resurgence" in unison. We and then a few others here and at the mic who actually understand the business, including Steve Wynn, made it confirmed that private jet flyins from China (vs macau) was the driver for what we called likely to be temporary blip. Table games faded to just 7%YOY in July for Vegas, and then dropped to DOWN 12% for August.
Again, see the IBD article as Detar is leading the pack of the clueless.
Fav part of the call was his Macau leader's wrap up comments about how things are picking up and they look forward to a better Dec Q and hitting their targets for the quarter. Not sure that guy understands the forward looking statement cby an SEC registrant concept, but that was VERY upbeat and optimistic stuff he shared!
the answer on japan was that they will be ready when japan is... the answer on credit is that no collection problems and the junkets have been light so that is why play/credit is lighter than prior.
Now the bigger junkets are consolidating and reshaping how they will come back in stronger, tighter form when things recover (my summary of broken english/thoughts shared by one of their women execs in macau).
if not obvious, Steve's circumspection on VIP, tables, smoking, october, backhanded comments re LVS competition and the current "environment" has cooled the jets a bit on the retail tape after hours... No surprise that none of the analysts are pressing him on the flap in Boston or Vegas falling off the cliff on table games in october... again, though, a key takeaway is that in Macau, mass and premium mass is the place to be given what is happening there. Anyone reading here with processing capability knows that already though. LOL
And here comes Robin the girl wonder to ask about credit collections... be nice Steve. LOL
As a follow on, Steve just told the BAML analyst that October is running at the nadir of VIP GR... he also just commented he thinks the smoking ban has created some disruption on the mass side and that the mess in HK (pizza protest) is not helping anything either. He continues to couch his comments in terms of how bullish he is on Macau's future.
Just now he is explaining that the gov't essentially told him he could have his 550 tables for the Palace which is why he said he was so "confident" about the big allotment on the last call. now he is saying he doesn;t know for sure what they will get, but that the govt tells them what they expect and then they work togewther to bring these IR to fruition. That is almost verbatim what Ho said about "getting at least our fair share" for Studio City earlier this year when asked about how confident he was about the 400-500 tables for phase 1 of Studip City. Ho actually went further to say the partnership with the Macau govt and MPEL were working together to "bring this new integrated resort to Macau" and Studio City was all about delivering the diversified gaming/spa/entertainment/shopping/dining experience they have coming -- all of which is the stated premise for getting table allocations.
I just typed that in about 1/10th the words Steve used. LOL
WYNN's fat holds went by the wayside, and still they had close to flat ebitda as mass play picked up some of their slack. They also bumped the dividend 20% and wil pay a $1/share special div now. They also note that the WYNN Palace will be done in "mid 2016"... a bit later than prior commentary, but no real surprise given the heavy 2015 calendar of projects now getting close to done (Studio City, Palace and Galaxy's new property).
It will be good to hear Steve's update on the outlook... and fun to note it looks like they took the lion's share of greatly diminished table games in Vegas for the September Q.
Steve's call underway now... Steve saying Xi has many keeping a low profile in Macau and that mass is making things ok for the resorts there as the social profile/non gaming entertainment and conventions begin to mature. Their flattish ebitda despite the big drop off in their VIP GR confirms all of that (same as LVS)... GREAT to see the WYNN shares bounce and this good news update for MPEL (the best positioned of all these companies given that it has the least amount of VIP in the mix).
Here's the media now "suddenly" catching up with what we have been discussing here about the "resurgence of Vegas" as early as first week in august. LOL
Just think, now that IBD's Detar is on the story, Shuli and Barrons tomorrow, and then whether memory impaired dolt here and his little multialias MPEL basher pal from China get it or not, next will come the genius analysts following this sector with their "timely" updates that Vegas' resurgence might not be continuing all that well now. Uh duh...
and just to be clear, we are presently on our largest ever reloaded trading position in MPEL comprised of the core at $17 and the trading sleeve (whether matrix understands street nomenclature or not LOL) now owned below $28 (both numbers excluding hedging gains -- most of which were discussed right here as we put the hedges on -- collected along the stock's glide down).
Those who have nothing better to do than review our comments on these basis topics over time can go back and read our posts on them... those who want to act like little girls on AOL can do that too... you'd think people with anger mgmt and high blood pressure issues would find something else to do besides sharing little girl on AOL venom here, but we could care less except to set the record straight when we see such bs. LOL
thanks for the share drjack. Bain is pretty bullish on WYNN's near term (we think WYNN's VIP mix will hurt them more than LVS reflected and certainly more than MPEL which has the most mass of the 4 U.S.listed companies, but looking forward to Steve's update/outlook tonight, particularly if he can confirm -- as LVS did -- that Xi is coming in december for the 150th anniversary celebration.
I see below our memory-impaired board girl matrixtrade still can't process info that we sold out the trade sleeve (basis below $34 back then) at $43 and explained why we were hedging the core (owned at $17) back to the 50d ema. LOL Stupidity is tragic, so is acting like a little girl on AOL with his new pal mytek/blacknite/idiotpumper/tahoe. He was funnier when he hyping MPEL getting to $75 this year, followed by his update that $21 was coming right up and with his delusion that we somehow give a flying rat's behind whether he "respects" us. What a putz. LOL
We still have the puts we wrote at $24 a couple weeks ago... we'll take that assignment. LOL
though... Nomura's chart uses "visitors to the island" as the denominator (x axis) and concludes things are eroding... that is off base. Wrong to be clear. MPEL's hotels are full on COD and likely moving back toward that now at Altira. So what becomes the relevant denominator for any look through analysis of gaming revenue and ebitda growth for MPEL is mass GR/table and mass GR/room. Both of those measures are growing well for MPEL, and so is overall ebitda. Repeating myself, VIP is less important to MPEL than any of the other companies, including LVS if you study the mass/total mix ytd through June.
As I wrote on the other thread, MPEL is not focused on trying to capture daytripper business and likely never will be, even as daytripper counts accelerate as the transportation infrastructure comes up to speed. In this context, it is not important whether length of stay or "spend per visit" increase if the denominator is the total visitation to Macau. Again, the business is simple from a resort operator seat. At COD and soon Studio City, you want the rooms packed out with players who will dine, go to the shows, and game there -- the "stay and play crowd."
Altira, repurposed and all... will increasingly be focused on meeting the needs and wants of the high end VIP tours. Those guys are typically in for just one night and then want a flight or helicopter ride back out the next day... they are not going to shows or touring the island... they are there to smoke, drink, play and enjoy the lux handling of everything they want. Again, not about "length of stay" or "spend per increased border crossing visitors."
Back to the video -- love the Bloomberg lady saying everyone is copying LVS -- MPEL is certainly NOT doing that -- not about MCE, low level/all segment mass, and not trying to have more rooms than anyone else, just focused on high end of mass and VIP. Manila will be a different game. ~1/3 VIP at least it seems, but ALL mass levels incl local walk-ins.
The Tracy interview was, as you put it on that thread, focused on "build it and they will come" along with his view that MCE facilities will eventually prove to be profitable for them more than on big events., as well as Tracy's comment that easing corruption/low profile thinking will, over what he called "a reasonably short period," restore GGR revenues (get growth back on track as it were). He also suggests LVS' room quantity and variety positions them to appeal to various market segments from mainland china better than any other company. All likely correct.
I just watched it start to finish again though, because I didn't recall anything about a linear relationship between room additions and length of stay other than his broad comments about families coming there for longer than a daytrip if they could get a room. However, that doesn't hold up to LVS running at more around 90% occupancy quarter in and out -- except 100% on holidays. Length of stay, whether he or Tam or anyone else doing business there likes it or not, remains stubbornly aroundjust one night, and will likely continue to be like that as all wishful thinking aside, they really do not have multi day conventions there to speak of (nothing like Vegas anyway), and Chinese people go there to game, not hang out for a week at a spa resort such as happens in Maui, San Diego/Carlsbad, the "Gold Coast" of Mexico or the elite Florida destination resorts.for example.
Further, the "spend per visit" wasn't really part of his theme... my point at the top of this thread was quite simple and apart from Tracy's. Visitation going up is neat, but MPEL, in particular, has no problem keeping its own rooms packed out day in and out -- thus driving 100% occupancy stats for them at COD. This is MPEL knowing their customer base, and having customers in the rooms that MPEL knows will "stay and play" and go to the shows. Repurposing Altira for the big tours is also about targeting what customers want.
I think you agree they would be a great additional concessionaire in Manila... Some 45k Koreans went to macau last year and a bunch from Taiwan as well. All of those guys will likely prefer the shorter trip to Manila once COD is up and running, and Caesar's will no doubt build a quality property -- way ahead of Solaire -- there is permitted. Who cares if they don't know how to make money running a gaming resort... they will add to the ambiance and relevance of manila as a destination place to game.
Nothing new here... but visitation was up 3%/7% for Sep and ytd (YOY). Given MPEL has run at 100% occupancy at COD all year, Nomura should chart companies' mass GR/room and table to understand what is happening to MPEL this year (VIP less important to MPEL than any other company in Macau). WYNN's report tomorrow likely to illustrate more crimp than did LVS' report last week. VIP is more important in WYNN's mix, and the Oct mkt share data was a tell.
"DSEC indicated that visitor arrivals increased by 3% year-on-year to 2,405,497 in September 2014. Same-day visitors accounted for 52% of the total, at 1,241,926.
Analysed by place of residence, visitors from Mainland China increased by 6% year-on-year to 1,595,485, coming primarily from Guangdong Province (641,481) and Fujian Province (75,084); Mainland visitors travelling under the Individual Visit Scheme rose by 11%, at 653,800. Visitors from the Republic of Korea (46,812) and Japan (27,331) increased by 24% and 7% respectively year-on-year, while those from Hong Kong (509,181) and Taiwan (79,968) decreased by 3% and 13%. Long-haul visitors from the United States (13,787) registered year-on-year increase of 7%, while those from Australia (8,840), Canada (5,031) and the United Kingdom (4,291) saw decrease.
The average length of stay of visitors remained unchanged from a year earlier, at 1.0 day in September 2014; overnight and same-day visitors stayed an average of 1.9 days and 0.2 day respectively.
In the first three quarters of 2014, visitor arrivals reached 23,529,009, up by 7% year-on-year, with same-day visitors sharing 53% of the total. Visitors from Mainland China (15,812,886), the Republic of Korea (420,464) and Japan (228,031) increased year-on-year, but those from Hong Kong (4,864,004) and Taiwan (726,921) decreased. Moreover, long-haul visitors from the United States, Australia and the United Kingdom recorded year-on-year increase; however, those from Canada registered decrease."
Forbes goes own to wax about how wonderful it is that Packer's Crown Resorts and others from Asia are plowing money into Vegas, a sure sign they will be coming evermore in ever-increasing masses... yeah, sure... and then that author, Muhammud Cohen (talk about a rough name to grow up with), who really is quite well educated and writes well and really ought to have a bit of knowledge about the sector and journalist blood in him after all these years, goes on to say how wonderful Packer's gaming resorts in Australia are doing.
He must be either getting paid by Packer's entourage or other cronies "developing" in Vegas. Those who have read the threads here about how difficult it is for resort operators to get Chinese players/whales to go to Australia know that is nonsense -- as told by Packer at his annual meeting and various execs in the articles noted. If Cohen was doing a balanced article, you know, kinda like a real journalist might, he might have noted that Packer and Crown have already failed twice in Vegas, and that MGM didn't want to add to their albatross position on the strip -- neither did Steve or Shel. No one we know in the mm business thinks Vegas has a bright future in GGR terms. Nah -- just blue hairs, tour buses, college kids on break'clubbing, CMA award nights and various conventions filling the buffets and off strip rooms, while non-gaming foreigners fill the rack rate rooms and overpriced "name" restaurants.
Re Nomura's dipstick chart, meant to add above that mass $ bet per border crossing is down for the reasons noted, but #$%$ does that have to do with, for ex, MPEL booking only players/customers they want in their best in class mass/premium venue? Absolutely nothing... most of those daytripper border crossers came over for a day, ate lunch/dinner, pulled low $ slots for a few minutes, had a drink or two, bought a t-shirt, watched a show and left on the next bus. Hard to believe any of these people get paid to write such inane commentary.
good post toast... only a couple of guys still posting anything other than schmeck here lately.
I agree entirely with Tracy -- see last paragraph of part two of my post below.
Ignatius Reilly wrote a novel about people like this... LOL
Let's excuse Shuli renn at Barron's -- we know she is only parroting what dippy analysts write, preferably and generally only negative "realtime, market making news" [as if and LOL] commentary starting about the time Xi's campaign began on stealth last summer, around the WC and first derivative going negative on Nomura's dippy chart.
So Nomura thinks that spending per visitor crossing the macau border has slowed starting about when the public "office manners" campaign, underscored by Party directives to avoid ostentatious showing of wealth and excess, began right about when the UnionPay nonsense, "visa restrictions" noise and the other 13 bs noise rattles all began buzzing in unison -- and all of that right at the start of Xi's real campaign to thrash all corrupt politicians and their payors began (as said above, in stealth mode)? How about we give them a BFD Leader of the Confederacy of Dunces" award? Ignatius would gladly cede the leadership crown. NFS all of the noise and very real fraud witchhunts have slowed down VIP and HNW direct credit play. And NFS much of the visitation, increasingly by mainlanders as HK patrons kept a lower profile in recent months, don;t play with the same wallet as the preponderance of players from prior to last summer.
Then we have the Forbes guy... anyone does more than read yhoo boards as diligence (or even if that is all one does on MPEL LOL), you know, like maybe read the data series released by the Nevada gaming commision and dcgi for Macau every month and then listened to WYNN's last CC re flyins, and then processes that more than a few private jets full of players went to Vegas from China in May, June and july would know that they also pretty much shut down in August as Vegas table games dropped almost 12% YOY. It may pick up again into EOY in Vegas, but the data showed the Chinese players slowed in july and stopped traveling to the Strip altogether in August