The stock took a nice hit, especially from the $1260 level yesterday, but dropping $1.9B of market cap today is even dumber than dirt, so we were thrilled to put half our trade sleeve back on after bailing that yesterday as noted prior.
Here's the simple math...
Maybe they paid a bit much for a business plan that is easy to compete against, but, yawn... PCLN will certainly make the most of it with their interconnectivity of travel and database mgmt. Will the $2.6B prove worthwhile in the end? Maybe... but the drop in market cap is as if they issued stock for the deal (i.e., 4% dilution), and then threw away another $1B of cash out of stupidity... they did not do either of those things. Why not? OPEN shareholders certainly would have preferred stock and a tax-free reorg. The answer is simple: they are telegraphing they think the sotck (currency) is TOO cheap to use in a stock deal, and they didn;t want to have to use monstor ebitda to immiediately rebuy the shares they would have been issuing in an equity deal.
Now the stock has taken out the gap at $1197 as I suggested was certainly possible, the shares are ready to begin the runup into June Q earnings which should be stellar and reignite the shares. Anyone who did not cover today should prepare to get stomped.
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.
See my comments on DAL's news from last week... AAL in the same great position except DAL has better routes, mgmt and balance sheet -- but AAL's relative valuation makes up for that. They will both mash it into EOY.
The HOTELS are also mashing! From IBD:
The record-high stock market and rebounding home values have made consumers feel more confident and comfortable about taking vacations, said Arthur Adler, Americas CEO and managing director of JLL's hospitality group. On the business side, the modest economic recovery coupled with slow job growth has necessitated more travel for workers, he added.
More recently, group travelers have begun to book rooms with increasing frequency, which should give the industry a further boost, say Adler and Scott Smith, senior vice president in the Atlanta office of PKF Consulting USA, an advisory and real estate firm specializing in the hospitality industry.
The important group-bookings segment, which includes state organizations, business meeting groups and worker incentive travel programs, pulled back not only because of the slow recovery, but also as result of the negative reactions to the American International Group's (NYSE:AIG) widely publicized retreat at a swanky resort soon after receiving bailout funds, Smith said.
Only now is the group travel segment beginning to book rooms on par with its activity before the recession, which should give the industry a further boost, he adds.
"I've been doing this for 25 years and have never seen the kind of economics that are driving hotel revenues right now," said Smith, referring to the steady rise in fundamentals and lagging construction of new rooms. "We think we're in a real sweet spot."
Investors think so, too. The R.W. Baird/STR Hotel Stock Index, which tracks the 15 largest publicly traded hotel companies, is up 11% year-to-date, outpacing the S&P 500 by about five percentage points.
Three of the six largest companies by market cap in IBD's Leisure-Lodgi
LISTEN TO THE TRIP CALL AND GUIDANCE UPDATE... LOVE IT THAT SHORT MORONS HERE THINK TRIP NUMBERS SUCK. PUTZES.
TRIP should run well tomorrow, and PCLN's raging volume is part of why TRIP is so bullish with their REV/EPS guidance update tonight. LOVE IT!
Last year MPEL expected "mid teens" GGR growth in Macau for the full year, which ended up being over 19% for the year. Ho referenced that outcome and said that things are ahead of last year and where he thought they'd be a few months ago through April, but that something like "mid teens GGR growth" is their current thinking for CY 2015. He also made a few great comments for the longs and negative press and talking heads to suck on: He said ~"We're off to a GREAT start on the 2Q, and golden Week was just phenomenal." Fun for longs, so ha!
Re the endless stream of negative news flow of late, he said they are "pleased and impressed" with the ongoing growth of visitation and GGR growth in Macau and that all of the "polarized" and negative news stories are just that. He complimented the analysts, notably Bain, for analyzing bs such as last night's Unioncard "money laundering" nonsense and quipped that he'd never seen anyone using the portable machines in macau. guess that is not going to topple the applecart... LOL
There was more, all good news for longs I'll add... Speaking of "add", we heard all we needed to know and are adding to the biggest 2nd sleeve ever this morning. Same for PCLN, another spectacular growth storiy trading at a makrt multiple while they continue to mash expectations... the market swoon may get worse for the high fliers momo names, but stocks such as MPEL and PCLN will be precisely the kind of stories pm need to own to salvage this year's ROIC and incentives into the turnaround ready to get underway any day or week now.
As usual, MPEL did a great job shouting down the news flow nonsense of recent weeks and days... here's some shorthand, but longs should listen to the call because it was very reassuring of the powerful MPEL story pieces.
Despite significant increases on consensus Rev, EPS, and ebitda in recent weeks and since Jan, MPEL solidly beat on EPS and ebitda and met the increased rev numbers. Noted that COD first two floors were reconfigured/disrupted during Q back all together again now.
Asked about the buyback resolution, Ho said they have a dynamic board (understand the opportunity issue) and that it was obviously a current topic, but we love the part about how they are looking toward not only the current plate, but a great opportunity to develop a major commitment in Japan soon. As with COD and then manila in recent years, we'd far sooner see them avoid issuing equity to build if they can instead go with ebitda, debt and capital retained.
EBITDA jump was great -- up 31% and crushed out the street increased consensus on ramping mass. Mass now accounts for 75% of overall ebitda, and 80%! at COD.
MSC and Manila on schedule. Listen to Ho's comments on the call -- he's genuinely excited about the opportunity and confident things will be superb there. Great comments. One analyst on the call said he'd just seen it and thought it was terrific looking. MSC is already up to the 15th floor and will be topped this summer he said.
PACCOR (manila income tax issue) should soon release news on their disposition of this per Ho. He has said prior he thinks that this will be resolved favorably for the concessionaires and today replied to a question on it by saying they are "highly confident very positive news is coming for us."
VIP is not so meaningful to MPEL these days as it has been historically ( or to others incl WYNN and MGM there), but Ho sees no Chinese govt agenda to quell gaming, VIP oir any aspect of Macau's GGR or general growth. That is all press noise.
We tend to not read Motley dope articles, but today is not much fun on any sector so I did to see if maybe it was wroth reading... not.
He suggests LVS is smoking, citing mass growth of 81% at Venetian and that VIP growth is better than MPELs COD? LOL Seems he doesn't understand MPEL has been emphasizing mass for some time and is already running 80% mass/premium mass at COD and 75% company wide.
LVS best property for mass was Venetian -- up 81% yes, all the way up to 54% of GGR at Venetian. And Venetian VIP "growth" was ahead of MPEL at COD... that is not an objective at COD! He called COD holds on rolling chip better than expected (3%, huh? that's in the "expected range"), but he did not mention that Venetian holds are better than their other macau properties, "lucky" by .50% this year and last. Nor did he mention LVS' ongoing struggles in Singapore... maybe he is trying to get a job as a "journalist" with barrons? LOL
"Our development pipeline continues to progress, with Studio City on-budget and on-track to open in mid-2015, while the timing of our Philippines Project remains unchanged and is expected to open around the middle of next year. Both of these exciting development opportunities are key components of our strategy to maximize return on invested capital and drive long term shareholder value."
Reread that last sentence for emphasis -- do you think they are going to Manila to dilute their ROIC? We sure do not as discussed at length here by us a few times since 2012.
"Macau continues to deliver robust growth across all gaming and non-gaming segments in 2013, highlighting its unique position to cater to the rapidly evolving Asian consumer and expanding middle class. Similarly, our Manila project is well positioned to address this segment in the Philippines and the broader region providing another destination to a wider array of consumers seeking a broader leisure and entertainment proposition. Both of these markets are expected to benefit meaningfully from wide-reaching development plans and significant infrastructure improvements, helping to improve access and enhance customer experience."
Here is more reference to doing more than just gaming in Macau and Manila -- and identifying and capitalizing on the emerging trends in mass and PREMIUM MASS that MPEL is leading the pack on. Ring any bells about what Pansy was calling her visionary thing in the article this week? LOL More like she is trying her level best to think of what brother Lawrence would say and ascribe that "vision thing" to herself whenever she finds herself standing next to an open microphone.
We look forweard to the june Q results and updated outlook from MPEL... we like Lawrence's upod framing of 15% GGR growth for Macau this year (said knowing VIP was being crossed into Premium Mass by MPEL) and can hardly wait to see more info on their "PHENOMENAL" Golden Week that began May.
After a month of "analysts" and talking heads wetting their pants on behalf of traders and hedge funds daytrading/shorting the Macau names, we now have a huge shout down of that bs by LVS, MGM and WYNN -- all operating there and actually knowing the real story. WYNN advised that mass/premium mass play was up 55% in April YOY for them (from their tiny base away from VIP, but still) and, to the chagrin of the naysayers on the sector, that VIP was continuing apace at 10%YOY.
Last night the GIC released more confirming data that Macau is roaring -- GGR up 11% for April so 18% YTD. That is well ahead of the sellside group think, and now they all need to eat some goat and raise their numbers for 2Q and 2014. As i have said many times, most of the well-informed, legit buysiders on the sector ignore the sellside analysts because they are known to be weak sauce. We exclude Bain from that bucket, but most of the rest need other work.
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%
Cool Bloomberg article this morning too.
"Gaming revenue from the six casino operators in Macau, the only place in China where casinos are legal, rose 11 percent to 31.3 billion patacas ($3.92 billion) in April, Macau’s Gaming Inspection and Coordination Bureau said today. The increase compares with the 7 percent median estimate of five analysts surveyed by Bloomberg News.
“As noted by all of the management teams that have reported first-quarter results so far, the VIP segment appears to remain healthy, while mass remains exceptionally strong,” Grant Govertsen, a Macau-based analyst at Union Gaming Group LLC, wrote in a note. “We remain biased to the upside, especially in the context of a mass-market segment that is inflecting higher than our initial assumptions.”
This was an important week for longs... all of the bs noise being yelled by weak analysts and the media as the momo shorts used them like puppets took an abrupt about face... no surprises or new info for those reading the quality posters here, except that 2 of the five analysts publishing nonsense up through last week were on the "oversold" horn this week. Too funny...
Good to see the successful retest of the double bottom now too... our suggestion on May 15th that the bottom was likely in at $31.09 proved a bit early given the last week of May mystery, but between Tianamen Square (Chinamen stayed home with their families vs touring anywhere) and then we had all the coincident one-offs and 13 noise items... but seemingly now the bs is done for this cycle. Have you noticed most of the bs multialias idiots have left already? LOL
Our PT remains $50 for this year (i.e., no later than the Dec Q CC)... and we've now "highly likely" seen even the closest we'll see to the left tail of $28 we said about a month ago was possible if the sky falls on china's economy or Putin rolled tanks into the Ukrain and opther former USSR territories. What about our right tail of $60+ between now and when they announce the january Q in early Feb or so? We'll see... but anyone unhedged short here now is asking to have their capital mohawked. The box hedging is done, and seemingly so too is the downside here...
p.s. The $.128/SH dividend was credited to our MS account this morning.
The airline, car rental and hotel businesses are all cranking. Great news for the OTAs, particularly EXPE and PCLN.
and FBR's little noise about the hotel booking business has had its day and done now.
New highs coming soon here...
"Adjusted EBITDA(1) was US$330.1 million for the second quarter of 2013, as compared to Adjusted EBITDA of US$203.8 million in the comparable period of 2012. The 62% year-over-year increase in Adjusted EBITDA was [primarily] attributable to strong growth in the mass market table games segment at City of Dreams..."
A ceo focused on quant and FCF generation?
"I am pleased to report another successive quarter of record earnings and EBITDA, building on the strong momentum in the first quarter of 2013.
"Highlighting the ideal strategic positioning of our flagship property, City of Dreams, this premium-mass focused property once again captured meaningful market share in the mass market table games segment which, in turn, has been the major driver of our impressive group-wide performance in the second quarter of 2013. City of Dreams' unique ability to cater towards these highly discerning, premium mass market-focused customers is highlighted by our market-leading mass table yields, which is increasingly important in a table supply constrained market."
"Premium mass focused property" is pointed here... as the most desirable players and MPEL have forged their very own direct stay and play relationships including credit arrangements settled up every 30 days, you need not wonder too much why VIP GGR growth has diminished in macau YOY, quite apart from all of the other headline bs and particularly as other venues try to follow MPEL's leadership on this dynamic.
Here's more from ho on that: "We continue to move forward with the fifth hotel tower at City of Dreams and anticipate to commence construction by the end of 2013. This iconic additional hotel tower represents another powerful addition to our wide array of amenities and attractions that City of Dreams already offers its premium-mass and high end customers, providing another tool to further extend our leading position in this key segment."
Tower 5 is rolling on schedule as poer subsequent updates.
Entirely possible now that the FBR noise is slain and given what DAL just telegraphed about the OTAs business for the Q and CY14.
Anyone who is short is going to be skewered over the coming weeks as this runs up into earnings (yet again).
blaqknight continues to be obnoxious here, but is he as lame as numb effer sheadbob, who wets himself that I am smarter than his stupidity? LOL As for others here? Several MBAs and attorneys -- so I would not agree my intellect exceeds "everyone" as sheadbob suggests in his blazing insecurity.
"One way position"? I suggested the stock was frothy/toppy above $43 both times earlier this year when several morons here gave me S for that, and i said it may test the 50d moving average (then in the mid $37 range). It did. I also suggested a couple of times that a disciplined tech trader would wait for a heavy volume breakout back above that now double top resistance level. One must be stupid to think THAT is a myopic bullish view.
I also said it was stupid cheap at $13 in nov 2012... and then again at $20 when it pulled back from above $25. Simple. I also suggested when it got back to $25 that the run to $30 by EOY was easy and that we might even see $40 as the momo guys were visible with all their moronic paid hyping. $40 happened. Hello?
We've said this bs drop was that and soon to end. Last week I said we think the bottom is in (after it bounced up from $31.02) as all the bs press put up by moronic pseudo journalists being manipulated by hedge funds shorting the sector regarding UnionPay cards, money laundering, corruption, and all the other nonsense is going to fade as GGR mashes the bs into pulverized waste.
Today the idiots here are joyful the macau stocks, weak of late, were pushed down in a no bid market as the desperado shorts pray to find cover for their stupid shorts from last week? btw, almost every time we've said the stock is bottoming, the context was it could go a bit lower in the rough market. Hello?
These are times to be aggressive and get long large if one has the capital and sophistication to take the ftm up $20 down $2 risk/reward on, but a special FY to putzes trying to dis me here.
The bottom is in, within peanuts now... we continue adding
From your comments, it is obvious you know little about the capital markets and the gaming business and venues. Alas, that board has been full of clueless cheerleaders since we shorted it at $85, covering WAY too early at $55 and then owning it from $6 to $14 after the big equity recap diluted SHs' cojones.
Here's a recap of what you MGM lovers don't understand, free of charge. Of the four companies listed here and having assets in Macau, MGM is by far the worst positioned. That is in terms of bearing the Vegas strip albatross (where gaming is dead except for low $ college kids binge drinking, bluehairs pulling slots, except the now rare Asians flown in to the WYNN and LVS resorts and at Bellagio) and massive debt, and forever suffering under the serious dilution they used to avoid bkr and paydown the once even more crushing burden.
What MGM does have going for it is MCE business (tech, dental and car conventions and CMAs as examples), the spring break crowd, and bluehair tour buses. One of the posters on the MGM board was raving about how busy Vegas was last weekend... he obviously knows nothing about Vegas or the business (was that you? LOL) and was seemingly oblivious to the reality that Memorial Day marks the end of the season, and that Vegas goes suntorched dead until October every yearwith interns rounding out the skeletal summer staffing.
Murren loves to talk about getting their second property in Macau because he knows that with just two properties, the keys there will mash GGR in all of their other albatross footprint put together, even incl Bellagio. He is extremely focused on getting to Japan because that offers the promise of serious GGR in just one property as well.
Meanwhile, MPEL's ebitda growth curve and mass and premium profile (now running almost double the group at 75% of total) and its ebitda multiples are cheapest in the group. And here comes COD Manila and MSC and Tower 5 in 2016 -- so three properties coming online w/in two years
See Bloomberg article for that fun read if you are long PCLN. Also see the Fox video with ceo Huston from a few minutes ago.
shorts are hosed on this (again).
Re "Anything else?" We could use a Woody Allen horse manure sock factory for the media... add Zacks to the Barrons' and IBD "hall of stupidity" crowd.
doc, the conversion of the most desirable stay and play patrons from VIP tours to direct credit relationship "Premium Mass" players is poorly understood by call it almost everyone -- but certainly most analysts and sellsiders from a significance standpoint. Premium mass and VIP trendlines at MPEL are more than expressed by MPEL's results -- this conversion dynamic is the PLAN and why MPEL is mashing competitors on a pound for pound basis. It is also a serious piece of why MPEL remains in fabulous standing with the political leadership in Macau... catering to these highly valuable visitors is valuable to MPEL, but it is also that to Macau's politicians, shop owners, restauranteurs and other cultural development aspects for the island and surrounding buildouts.
We don't think credit availability is an issue for most quality tours or players, but losing the cream players to direct Premium Mass is not going to be good for tour operators dso/collection stats. LOL
"Get your motors running"!
He's one of the new deputy cio guys so he's not the lead on analysis of the sector or making the decision to own Macau companies, but he is there as the spokesman sharing the macro view of those key ideas in the now expanding equity mgmt business. Easy to give him a pass on not knowing the details but his reference to being very willing to invest in companies trading at 10-11 ebitda relative to [rev] growth of 15% was "correct" and pointed -- as long as one realizes he talking about overall street estimates for GGR being the 15% part.
As toast notes, those who know the details, including Pimco's buyside research guys (I've been suggesting the buyside/pm on the sector largely ignore the sellside analysts in this sector) and, anyone comprehending the legit posters on this board over the last couple of years understands, MPEL is growing revenues and ebitda at significantly more twice that 15%rate! He also mentioned Macau Studio City is coming online in Macau next year, but he did not know (or at least mention) that COD Manila should be up no later than October this year (in time for Golden Week) and represents and outstanding new growth venue for the company (including the little noticed second big bump in budget for Manila -- some 25% all in this week), nor did he mention that Tower 5 at COD, what will be THE ICONIC property on the Cotai strip, will be online in 2016 or that Phase 2 of MSC will be on the heels of that... or that MPEL will likely fare brilliantly in terms of getting a concessionaire seat in Japan when it is ready for gaming there.
Brian Sullivan's comment was revealing -- most of the street doesn't know the MPEL story up to now! Hey Sully, Packer's "Crown Resorts" is trying to build a new casino in Australia, not MPEL which is "Melco Crown Entertainment Limited". LOL
We also love Pimco talking airlines now. Pals know we've owned DAL and ALK since late 2012, and AAL t6m. Lots of room to run higher still on those too.
Steve and his execs comments on Macau and VIP absolutely slaughter the bs noise that has pummeled the group in recent weeks.
As to whether VIPs and tour operators are pulling back a bit? "Not" they say. These are some of china's wealthiest people and continue to propser from all points they see. These people are being "prudent,careful and conservative, no change in any of that in the seven years we have done business here " says one of Steve execs in Macau. Steve also dissed the pundits suggesting VIP play was under pressure from liquidity concerns there saying that "the people in America [so dip S analysts and talking heads] saying things like that [don't really have any idea about China's massive strength economically] and those pontificates talking the loudest have never even been there." They also made fun of clueless comments about VIP creditworthiness concerns. We've said prior that MPEL and WYNN do not have these issues -- check out Steve's answer. Love it.
Then Robin (clueless analyst who always harps on holds) goes on to ask 3 times about ~"isn't VIP going to slow down as the economy slows and liquidity contracts?" You'd think she'd figure out that she, CS, WFC and a couple other weak sauce analysts would all give some credence to what Steve Wynn, Shel and Mike, and Jim Murren et al have been trying to tell them about china's elite and GGR revenue growing fiercely for years to come over there, but no... Steve also hammered on how China's economy is amazingly vibrant vs the U.S.. fun to listen to him beat on s head analysts in his charming slay manner.
If you missed the call, read the transcript... Steve's comments about the next 60 months growth coming in macau is gonna dwarf what is seen so far is really great MPEL longs in particular. Love it Steve!
It took two weeks a few days to turn up, but PCLN, TRIP and EXPE are all raging now.
Did I mention shorts were hosed on these names? EXPE and PCLN have the greatest upside from here as TRIP has run 15% since my thread start and the other two are just shy of 10% as of the close today.