This summarizes the negative headline news from late July through the end 2014 news (but unauthorized UnionPay swipes rehashed for the 79th time?)... and pretty easy to suggest GGR comps will be tough through at least last Feb's 42% yoy increase as well... and even the biggest skeptic has to laugh at the analyst commenting that the big growth numbers in 2010 and 2011 are unlikely to be seen again... those years are coming off the very troubled late 2008 and 2009 levels caused by the financial crisis... and the big bump years they note of 2010 and 2011 also had the lapping of all of Cotai coming on line, including MPEL's COD in 2009. At least this author from bloomberg is knowledgeable enough and actually a journalist such that he is among the first to point out that the "corruption crackdown" is about shutting down "illegal funds" and transfer thereof as contrasted with trying to eliminate gaming through junket tours and otherwise ruining the Golden Goose that is Macau.
Also, beyond the WSJ and one other publication this week, seems it may take a few more articles pointing out that still 80% or so of peak VIP GR is still playing in Macau -- obviously not corrupt Beijing officials or fraudsters being chased by Jinping's Fox hunters -- and that mass is holding up despite the data noise (smoking ban table shifts ti VIP) and adverse publicity re Xi Jinping's "corruption Fox hunt."
How long until this morning's tricky january start on all stocks resolves to continuation of the broad-based bull run? Hard to imagine U.S. listed stocks getting seriously clobbered anytime soon given the world remains awash in liquidity with more QE (and strengthening USD) coming from everywhere except the U.S. Fed... As for MPEL? The Xi Jinping updates and LVS permit news has said a lot... next on tap are the table allocations... good news there will inform all the the green light is back on for Macau -- unless one is amongst the Xi Jinping "fox hunt" targets.
Balanced, no, actually skewed favorably, article out of Forbes yesterday as regards Macau prospects for 2015. Seems he's done thinking that Vegas is going to be a sustained diversion, too.
The author's thoughts on the flailing development plan for the Aquis resort shouldn't surprise those paying attention either... Aussie gaming remains unlikely to be a serious competitive threat to Macau when the patron is Asian gaming as it will continue to have the core problem discussed above and on other threads.
"Tony Fung takes a walk from Aquis: A $7 billion resort at the far end of Queensland always seemed far-fetched, even for a seasoned Australian investor and Hong Kong finance titan like Tony Fung. Since Queensland officials decided to play hardball on Fung’s acquisition of Reef Casino in Cairns, near the Yorkeys Knobs site proposed for his massive Aquis resort, Fung has hinted he’ll take his money and connections elsewhere. He’ll make good on the threat and a desperate Queensland government will come running after him, offering an even sweeter deal for a smaller investment."
It wasn’t the first time the Communist Party’s flagship newspaper has compared Hong Kong unfavorably with Macau in recent weeks, but the language in this week’s editorial was more strident. The heavy praise for the gambling hub comes shortly after Chinese President Xi Jinping visited the former Portuguese colony to celebrate the 15th anniversary of its handover back to Chinese rule and the inauguration of Chief Executive Fernando Chui for a second term.
“Why has the gambling port remained quiet while neighboring Hong Kong has erupted in protest?” asked a story in the English-language edition of the Global Times, a nationalistic tabloid, as Mr. Xi was preparing for his visit. It went on to suggest that a stronger history of legal education in Hong Kong and a generally more peaceful populace in Macau explained the difference.
The People’s Daily editorial highlighted Macau’s “stunning” economic growth rate in recent years, and argued that Macau is a “harmonious” and “stable” society. Mainland Chinese tourists can feel the “warmth” of locals when they visit Macau, it said.
“Macau people are content and grateful. Hong Kong people are a bit rebellious and resistant,” it added.
goog title for more if you have a WSJ or Barron's subscription... good to read something other than Shuli Renn and Jim detar's #$%$ "reporting."
What? Macau getting some respect in official Chinese State media? LOL Beijing is now praising Macau very publicly... everyone welcome to go enjoy Macau, eveyone except "corrupt officials" and others out of favor with the Xi Jinping regime and "Fox hunt"... including anyone friendly with the prior regime or Zhou, the former director of China's national Security who is now imprisoned in China. But in relief for the casino operators everyone who is not a #$%$" can begin to resume a sense of normalcy soon... that means mass GR along with, still 80% of VIP continues to play in Macau. Vegas GR remains absolutely hosed since the neg 12% yoy on table games in Vegas though... none of the Asian VIP tours are coming to Vegas anymore... and the bs policy of 3% table growth limits (when the 8 new properties need more like a 200% increase forward 30 months) ought to soon be discarded toward a logical end, too.
Dec 31, 2014
Beijing has a new favorite Special Administrative Region, and it’s not Hong Kong.
In light of recent pro-democracy protests which have roiled Hong Kong, China’s state media has trumpeted the virtues of Macau in recent days as a warning to the former British colony.
“The road is hard for Hong Kong as it is wearing the right shoe on its left foot,” said a headline in the overseas edition of the People’s Daily on Dec. 29.
The accompanying editorial (in Chinese) extolled Macau’s efforts in catching up with its “big brother” S.A.R. in a number of areas including economic growth and crime rates. Hong Kong, in contrast, continues to lose its advantages over its tiny neighbor despite being one of the “Four Asian Tigers” once upon a time, it said.
It wasn’t the first time the Communist Party’s flagship newspaper has compared Hong Kong unfavorably with Macau in recent weeks, but the language in this week’s editorial was more strident. The heavy praise for the gambling hub comes shortly after Chinese President Xi Jinping visited the former... co
toast, you have said many times that the stock is dead until GGR recovers, including last week at the precise bottom seen this year (i.e., the retest of the july 2013 low on the 17th).
My point here was that the stock has rebounded a bit without any notion of improving GGR anytime soon and there is nfw any quality buyside firm is ascribing more than 2 cents per share to a 7 years out "maybe" on japan... the optionality here is that Macau is not permanently dead on mass, premium mass or GGR... and MPEL is better situated than any other firm in that regard, including the little piece in Manila that may one day become far bigger than anyone is contemplating save perhaps Packer and Ho.
WRT "recovery" for the stock, I'll think of the reversal as that once it blares past the 200d ema just above $30 on heavy volume... it is not going to get there until everyone can see that GGR is far from dead in macau and that the best days are ahead on that score. Only those willing to play on value and baseline ebitda multiples should be involved in the stock between now and then... of course, this is all about risk/reward, a longtime theme here. Do have a look at the weekly chart though... nice spinning top below $24 -- so only the "lucky ones" (LOL) shorted or sold out at $21 the day you said one "can't fight city hall."
forgot to add that tax loss selling is largely over for pm in October... so perhaps you meant trivial retail ownership/volume in this name somehow matters to a 5m shares/day tape?
As noted several times here (though matrix dolt and his pal wet themselves over vocabulary LOL) box shorting mattered this Q -- right up until Xi Jinping left without killing the Golden Goose... but I digress
huh? Go back and read your "you can't fight city hall thread" top to bottom... you posted that on december 17, the same day I suggested the retest of the July 2013 low was a big event in chart terms... and after repeating many times that the "coming reversal, in a matter of days, weeks or months" had the potential to be quick and sharp. The stock is up some 24% over the last 8 trading days toast... and GGR is sukin for the month and Q and has no observable turnaround just yet (except to repeat that still some 80% of VIP play continues and the noise in the mass numbers will take a while to sift well) as has been regurgitated for months now...
Here's one of your many comments (Dec 17 -- 12 days ago) that VIP/GGR turning up is the only way this sector/stock are going higher -- into the teeth of my suggestion the entire sector has been ridiculously oversold and is way overdue for a reversal.
"It should be noted that while 2015 GGR growth is predicted to be negative it is also predicted to pick up in the back half and return to single digit growth in 2016.
To me all that stuff means I have to decide if I'm willing to accept MPEL is dead money for at least another quarter unless an unexpected turn occurs in Q1. "
On the same thread, here was my comment on analysts/reversal:
"So now, as even the shorts posting s head commentary here all month are pointing out that most analysts are sukin, those "listening to the analysts" are likely to wind up on thew wrong end of the reversal, just like they did in late 2012 and mid 2013 and early 2014 and reloading the dip before the retest/double top in March...
Seriously toast, the "analysts" are F worthless on this sector. On the airlines, oil& gas, banks and many sectors there are several excellent analysts, but seemingly only Bain actually talks to the exec teams even... the rest can;t even get the facts correct most of the time, let alone share worthwhile insights.
and "So far this month" -- this is the Xi Jinping month"
This stock has another $5 to go near term, and then another solid bump when they get the financials filed and the equipment company spinoff done ahead of schedule.
Our re-entry on CAR at $48 is running well too... close to closing that one out again but riding high for now. Those shorting these names at recent lows simply do not understand the business or the markets.
Amazing this robbbeatch putz continues to post here all day long... Who is paying these morons trying to influence small retail holders when the tape runs 10m shares a day? Tragically stupid...
One more comment on japan before we go off to dinner...
Hard to say this is more than 2 cents of discounting here since the stock dropped on all the bs noise before AND after Abe's snap election. Again, N.B. that the Dec month GGR will be awful and so will the Dec Q, and the Macau stocks are now rallying hard on that very visible "bad news"... the stocks will smoke higher once THAT turns around, even if it takes until visibility improves on the 8 new properties coming in Cotai... but in the meantime, it is good to see that imbecilic "basher" putzes getting socks full of horse dung stuffed down their throats as their bosses' capital get thrashed. It could not happen to more deserving idiots.
Although you and one other quality longtimer here have suggested that the Macau stocks would not recover until VIP and GGR recover, that is decidedly not happening just yet. in fact, the casinos are about to report a really bleak December month and quarter... and yet, the stocks are rallying... sharply at that.
You ascribe that to the buyback vand then the hope that Abe gets legislation done that will enable awarding concessionaire licenses to develop IR over the next 5 or so years earliest. Clearly those are not the reasons the stocks are rallying... MPEL's buyback went on for 12 consecutive days and only on the last few did the stock stop falling. In the end analysis, buying in the first $100m last Q at $27 was a statement, but buying in another $200m+ at ~$24 blended was a louder statement that the Packer and Ho brigade is #$%$ at the stock valuation and going to do something about it as discunting will soon begin on their big victories coming with Manila (that you continue to dis) and Cotai (Studio City, Tower 5 and phase 2 of both SC and COD manila).
Similarly, a maybe on getting a japan nod and maybe getting it built in 5 years and getting to positive ebitda in another year or two is not worth a whole lot to buysiders laying in shares today... so why did the bs stock drop stop and reverse some 24% or so at today's high? I'll suggest it is all the reasons that have been discussed here as ridiculous discounts (to MPEL's intrinsic valuation on adj ebitda) being reversed with what is now becoming the pendulum swing back away from stupid levels. I'vs suggested it can and likely will be quick, and now you can see it for the fourth time since the ipo.
Can it retest the recent lows? Sure, said a few times here... but a break below the July 2013 low is highly unlikely barring a big collpase now, especially since the tea leaves from Xi Jinping and the new macau leadership actually understands the business and need for reasonable/visible policy.
The full opening oif COD manila is scheduled for "prior to the CNY celebrations in February, and unless COD Manila is a massive fail (we'd give that a zero likelihood), MPEL's share of GR and mgmt fees should quickly more than cover the Q operating expenses of ~$30m ($120m+ annually) for the Sep Q... MPEL and its partner will also benefit from the GR tax concession granted to the four concessionaires earlier this year... less tax obviously improves the ROIC vs original plans for the resort when MPEL's two billionaire co-chairmen decided to step in with Sy (the richest man and commercial developer in the Philippines). If not obvious, the naysayers on Manila think it will never amount to much... good challenge for Lawrence leading up to the japan concession awards coming over the next year or so if Abe has his way in the legislature. LOL
It may take a couple of years for the other two concessionaires (total of 4) and the new infrastructure developments, including construction of the U.S. Navy's new and permanent base in Manila, to help ramp COD Manila to full potential -- just about in time to begin developing the second phase of COD Manila (and Phase 2 of MPEL's Studio City IR for that matter)...
Yes, and all of that will also coincide with MPEL opening Tower 5 at COD Cotai in early 2017.
LVS obtaining the permits they need to complete the Parisian IR across the people mover walkway from MPEL's ideally situated COD on the Cotai strip is great news for all IR developers with projects underway on Cotai...
In their first major action since Tam;s departure last month, it is now a blaring siren that the new regime understands the importance of timely, fair and reasonable process for working as partners with companies deploying significant capital resources and responsible for generating economic development, jobs and commerce/future tax revenues in support of Macau, Hengqin and surrounds... good to see the stocks begin to respond to the news that Xi Jinping is not out to ruin Macau's "special competence/edge" (gaming), and rather continues to sponsor additional entertainment, retail shopping, restaurants and other innovative resort offerings to encourage tourism and leisure on Macau.
See Shel's quote in the release where he outlines, just beautifully actually, how LVS (and MPEL and WYNN for those who understand the development efforts there) is building out its very large Cotai footprint in support of leisure, entertainment, shopping, MCE and hotel operations.
Next thing you know, we should begin to see progress and indications that directionally compliant developers are going to get their "fair share" of tables for the new properties coming on line over the next 15 months or so (so Galaxy, LVS, WYNN, and MPEL)... after all, it is pretty difficult to build out an integrated resort centered on gaming without building the casino operations as the trims go in...
Here's the Cooperman aspect if you missed it amongst all the bs of the blithering shorts here as they squirm on the 20% rally over the last 7 trading days.
Those who took out the easy gains last january and march and or hedged along the course of 2014 when we talked about it did just fine on the macau names this year, but from this big reset low of late and given all the new product coming on line in Macau and LVS press release making it obvious the new regime and Tam's replacement are out to make things cook vs the prior obtuse nature of development administration, 2015 should be a far brighter story than 2014 played out for the Macau names.
All the guys laying in heavy shares last Q between $37 and $27, including Lee Cooperman and a dozen or so other rock solid hands, likely added along with us over the last couple of weeks, more lately fueling the V reversal off of the July 2013 low retest at $21.
And now one of the longtime naysayers here suggests "emotional longs" (LOL) think this has "turned the corner" so he's itching to "short again"... great, glad to have guys out there thinking like that.
Macau has certainly NOT yet turned any corner on fundamentals, and still, it is clear, all of the tigers and foxes Xi Jinpinig's welathy friends and family do not want to participate in China's reconfiguration of their economy are not going to return to Macau. Simple reality... Although I've suggested we may yet see another retest of the July 2013 low, in recent days it looks a bunch more like the smart money is laying in additional shares in the sector, ready to go large as it were for the extremely positive catalysts coming for Macau as phase 2 of Cotai's development plays out and begins to be discounted NEXT year... not yet to be sure -- next year.
On that score, I've noted for some time we think the entire group is ridiculously oversold, with the latest part of that assessment being that MGM is now the only one not taken to the woodshed... but now even LVS is cheap enough to buy a few slugs. Come and get us shorts... ROTFLOL
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!
Merry Christmas Dave!
You flagged out phone gaming a few months back and this update from ggrasia is interesting, but the HK exchange filing (from Galaxy maybe as they are still heavily reliant on VIP -- can't find it with a quick search) suggesting 20% of aggregate VIP GR in Macau is in the form of phone bets has to be far too high.
It may be that the two houses that formerly allowed phone gaming have recently dropped out have lost 20% or more of their business, but for them to suggest it is 20% of overall VIP and infer that others are either have or are now going to pull it under the glare of intensified scrutiny is to suggest that VIP has suffered no declines from other factors on a YOY comparison basis.
The other factors? (1) 100 or so of Xi Jiinping's political enemies (millionaire/billionaire "tigers") have fled to U.S. seeking political asylum and wealth protection based on their versions of how they got there, (2) last year in excess of 190 junkets had rooms/tables in macau; some believe that is cut by 75%+ now and likely going to less than 15 tours on a large drop off in number of small tour operators, (3) many former VIP tour patrons are now the highly sought/valuable "premium mass" players on direct credit with the various casinos, (4) many allegedly "corrupt" officials have been identified following the 75,000 reviewed per Beijing's release of info on it two months ago -- at least 690 of those guys have either been taken out, had their careers ended and wealth taken, or fled China... but it is highly likely they won;t be coming back to Macau for any reason, (5) as a result of all the foregoing and the "chilling effect" Xi Jinping's anti-graft initiatives have had on not just "bad guys" but also legitimate business people in china, it is clear many continue to lay low -- perhaps especially during Dec leading up to Xi's visit.
Chinese player VIP has been clipped, but 80% of peak VIP GR is still happening on legit/legal and rule compliant tours.
ain't today's move special? Hope all of the idiotic bashers here are enjoying themselves.
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.
NYT this morning
HONG KONG — The former second-highest ranking official in the Hong Kong government and a property tycoon were sentenced on Tuesday to seven and a half years and five years in prison after their convictions in a high-profile corruption case.
The former official, Rafael Hui, served as chief secretary, the city’s top civil service job, from 2005 to 2007. He became involved in illicit dealings that led to a jury’s finding him guilty on Friday of five charges, including misconduct in public office. Thomas Kwok, one of two brothers who were co-chairmen of Sun Hung Kai Properties, was also found guilty in a conspiracy to commit misconduct in public office.
“You were highly regarded, articulate, diplomatic and obviously able,” Andrew Macrae, the judge who announced the sentence, said of Mr. Hui. “You were blinded by the desire to sustain the high life to which you’ve become accustomed.”
Raymond Kwok, who is now the sole chairman of Sun Hung Kai Properties, was found not guilty. Two additional defendants, found guilty of helping to pass on the illegal payments, were sentenced to five years and six years in prison.
Lawrence Lok, Thomas Kwok’s lawyer, said outside the High Court on Tuesday that he would consider filing an appeal in the next few days, but he conceded that the sentence was “proper” and “quite lenient.” Edwin Choy, Mr. Hui’s lawyer, said as he left the court that he did not yet know whether his client would file an appeal...
goog title for full article, these guys were in trouble before Xi Jinping became president, so they were not "fox hunted" as "political enemies" or "dissenters"... but if they were baccarat players, they won;t be back to macau playing tables games for a few years.
The trial and sentencing of Mr. Hui and Mr. Kwok came at a turbulent political time for Hong Kong. Beginning in late September, tens of thousands of dem
below is one of the dumbest posts of the week...
Here is my "declaring victory" as the putz writes from the other thread. LOL
"Can it retest recent lows? of course... but good to see the hard bounce off the July 2013 low at $21 and MPEL still sopping up discarded shares down here. $200m or so remains on the first leg of the Company's buyback plan..."