Jim, if you study the Q cc of the four listed companies, then you know that Ho is always the most conservative CEO in the group as to tone. As noted prior here, recall he reset expectations for mass back on the august CC when he contradicted LVS, WYNN and MGM's outlooks on mass play to say that he thought a mid teens mass growth number, compared to a run rate in excess of 35% ytd then, was a more sustainable level going forward (because much of the shift from VIP to premium mass was done as others continue to ~"replicate the strategies MPEL has pioneered in that regard" as carefully acknowledged by Steve in April and July and because of the overall chill/foxhole effects of Xi's tigers and flies campaign...), and that VIP would remain subdued until out to 2015. On the august call, Ho also made the comment that he thought Macau GGR growth would get back to trendline (mid teens growth overall) in mid 2015 or so as new properties began to come on line (Galaxy, Studio City, Parisian and then Palace, with another 4 projects after those incl tower 5 at COD).
Compare that "tone" and caution to the other 3 companies on their 2Q earnings call outlooks: Steve was saying things were already looking up in late July on VIP and he thought 2H would be better (in hindsight now, perhaps because his flyins to Vegas were done?) and when Shel was talking about how the 4Q would be significantly better all around, incl reference a month later to Dec would be very strong again.
But here is the totality of what Ho has to say on the call (Phistar using the transcript and subsequent company press/input it seems):
On VIP junket tours to COD manila
… [We are] excited about the imminent opening of City of Dreams Manila. We are planning on opening the doors to customers in December for a sneak peek of what the property has to offer, before a grand opening prior to Chinese New Year in 2015.
Love Citi's table count math below: they added 'em up and get to a minimum of 45% increase over the 3 years... that is good thinking though, only about 50% more needed over the next three years (leave to later the second phases of places like Studio City now being planned on the fully committed land bank), some 20% ahead of Francis Tam's bs "3% annual ave guideline" that the new regime and Xi need to quickly eradicate, to be replaced with a new "guideline" -- one that grants "fair and reasonable" tables to all of the Integrated Resort builders furnishing 90%+ of Macau's tax revenue collections, providing economic development premise for funding and jobs for the entire Island and surrounding commercial buildout already underway, and making sense out of China's new "showplace" destination resort for entertainment and relaxation.
"But concerns lie in the tight labour market and once all six major casino projects in Cotai are completed by 2018, Macau's table count will rise by 42 percent from around 5,700 to some 8,200. Citi Research says this will lead to some 21,000 new jobs for local residents.
The outcome is that by 2018 some 25 percent of Macau residents will be employed by casinos as dealers/cage cashiers.
Moves by the Hengqin government to start work on the Macau LRT link to the island by year's end is also expected to have an impact.
This would lead to a 24-hour border crossing between Hengqin and Macau. Citi Research says the border changes would be a positive catalyst for Macau. At present only about 8.0 percent of Mainland visitors entering Macau by land use the Lotus Bridge/Hengqin border.
Citi Research adds that as the difference in operating hours between the Hengqin border and the Gongbei border narrows, more visitors are likely to enter/leave Macau using Lotus Bridge/Hengqin border."
We know Citi's analyst group is less than influential, and I won;t make fun of them here despite the LVS and MGM promos/comp rooms going on right now, but the rest of this is a fun recap from the Asia Gaming Brief:
The positive outlook comes despite a 19 percent decline in Macau's Gross Gambling Revenue in October, the worst drop on record as VIP traffic shriveled.
But Citi Research points to sound occupancy rates at the hotels, with more arrivals expected with the opening of new casinos in Cotai in 2015.
Apart from Las Vegas Sands’ hotels, which have 10,000 rooms with an occupancy rate close to 90 percent, other major casino hotels are almost at full capacity with 98-100 percent occupancy. At weekends, rates are close to 100 percent.
The view is that casino management believes the Macau market is supply driven, with gaming revenue growth expected to turn positive once new supply comes online from mid-2015. At that time Galaxy Macau Phase 2 is set to open followed by Melco Crown’s Studio City.
Citi Research says casino operators have learnt from past experience and are unlikely to compete on price. In 2008/09 during the financial downturn, a price war broke out as operators competed on junket commissions.
The outcome was that operators ended up suffering from narrower margins as visa restrictions hit Macau arrivals and slowed GGR growth.
Citi Research says casino management among the six operators will instead focus on improving product offerings.
The companies themselves are also expected to maintain strong balance sheets and remain cash-flow generative despite the recent weakening in GGR growth.
“We believe capex at all six Cotai projects is already fully funded and don’t see any need for the operators to make irrational moves to steal market share,” the bank said.
But concerns lie in the tight labour market and once... CONT as to table count comments and 24-hour border crossing
Apart from the "little girl on a" moron dissing Manila prospects here, those who can think might consider that MPEL's co-chairmen, Crown's Packer and Melco's Ho are two of the world wealthiest men (having net worth exceeding $7B and $4B, respectively, and they likely didn't sign up with Sy, the wealthiest man in the Philippines, to do only marginal business at COD manila. There will assuredly be a honeymoon and ramp process, but for starters, they will quickly generate sufficient revenues to cover their share ($30m/Q of preopening opex , a # sure to go up on opening/marketing/full staffing), and soon after drive hurdle-plus ROI -yes, much more than trivial ebitda and EPS.
Macau-based casino giant MPEL is set to start bringing its CODManila to life next month with an initial soft launch eyed for the $1.3 billion integrated entertainment resort along Manila Bay.
.. Ho said COD Manila, the second of four resort-casinos in Entertainment City, would have a soft opening next month and a grand launch before the CNY (Feb 19th).
“We are excited about the imminent opening of City of Dreams Manila. We are planning on opening the doors to customers in December for a sneak peak of what the property has to offer before a grand opening prior to Chinese New Year in 2015,” Ho said.
“The Philippines gaming market continues to grow strongly and we believe the introduction of City of Dreams to Manila, with its collection of world-class brands and attraction, will significantly strengthen Manila’s appeal to local and international customers who are seeking an exciting leisure and entertainment experience,” he added.
Ho said initial clamor for rooms and gaming tables in COD Manila has been high, with demand already exceeding supply. “We have more demand than available rooms and tables for junket partners in the Philippines.. going to be the fastest growing gaming market in the world this year... so we are encouraged about it," said Ho.
Goog that title for the full article, but MPEL is jumping ahead with the "soft opening" and promotional efforts with the local press, their 4000+ employees and their families and friends and so on...
Great to see...
Beautiful bites: Tuna sashimi taquitos, lobster rolls, pork belly kushiyaki with spicy miso paste and jalapeño, yellow-fin tuna in Yusuf and soy are to die for at Nobu Hotel.
"Twenty years and 30 restaurants later, Nobu has not lost its luster. Now we no longer need a passport to sample his genius as City of Dreams Manila is opening Nobu Hotel, second only to their flagship in Las Vegas and the very first in Asia.
Last week I was invited to an exclusive preview of what their 31st establishment has to offer. From the first bite of the tuna sashimi taquitos, I knew we were in for quite a treat. Little cubes of tuna in a crisp shell topped with salsa roja, jalapeño and micro cilantro. Buttery rich lobster rolls. Melt-in-your-mouth pork belly skewers in spicy miso … and that was just the little canapés.
We then proceeded to be schooled in the art of sushi and sake... We also managed to keep our lips moist with the chilled Nobu house sake. Our glasses were never empty as we all generously poured for one another...
everything was just so good that all around the table no one could really answer which one was our favorite.
“You never get bored,” declares executive chef Zachary Hillberry. “Each course is all so different from each other.” Which is true. The beauty of each dish was that they were all distinct in taste, not drowning in sweet soy and miso, as most Japanese-fusion copycats tend to do. Everything had balance: salty, sour, sweet, bitter, spicy, crunchy and creamy. From flavor to texture, a few fresh herbs and little savory condiments, everything was well rounded and always exciting.
The service will also be impeccable with Nobu’s unique, friendly style. Servers are meant to guide you through the menu and help..."
Yonder, the chart has been broken since the Zhou and Chen revelations in August, a few weeks after Lawrence Ho reset expectations for the entire group as to 2H14 GGR. Just 1-2 weeks prior, you may recall, WYNN, MGM and LVS execs were all still suggesting that VIP was going to improve very near term and none of those teams had concerns about premium mass play or LVS promotional activites. As has been suggested here, the stock won;t be a "technical buy" until back up around the low $30s with a heavy volume run of the 50d ema back above the 200d ema. That can certainly happen in a hurry, as Ho explained about Chinese sentiment changes on the last conference call, but until then, anyone buying short duration call premiums on any of the stocks in this sector is enriching the option writers on this sector. Those who want to own puts are also fun to serve. Our short puts from last month are about to go to expiry. LOL
As for aggregate option volumes on MPEL, they, as with the stock, have seen volume fade heavily. Have a read through my recent 13F thread to review where 11 of the top 15 and 20 of the top 25 registered holders as of the last filing either added to or put on new positions... Note the quality of the buyside coming onto these shares hard last Q -- and they did such buys between $36 and $27... fwiw, pm generally want to sell option premium, not buy it (unless a structured spread or collar, but then not on a tiny option book such as MPEL's).
We now have two days of the constrained link tape... that hasn't meant anything to trade in this group. But it is clear that Nov data to date is not showing any signs of improvement in GGR... Pansy said this week that the corruption crackdown is not a problem... Imagine that. She must be trying to make new friends in Beijing.
Hey drjack, hard to read much into a week of prelim data on mpel down ~1% share from overline trend 14% back to normal (12.8%) this week, WYNN dropping a point from 8.7% to 7.6% and MGM rising to 10.8 from 8%. Hard to say whether Pansy had Sun City over for a few days vs MPEL last week... but starting to look like a trend that WYNN is running soft on hurt VIP. Ex the WYNN effect, small changes in large VIP tour play or hold can easily swing the numbers around a bit like this.
As toast and you suggest, it is clear things are not geting better YET. Ho's take on turnaround sentiment/timing:
"things do change very quickly in China... Although I don't believe similar to the global financial crisis where there was a light switch event, this time around I do not think there is a light switch event.
But at the same time the anticorruption crackdown -- the way that has scared people and scared consumers, it's very much a physiological thing. So I think if you look at the European debt crisis or other crisis in the past I think the moment people get used to the concept of this being with us going forward I think people will spend again."
Altira repositioned to cater to large VIP operators and turnaround visible in 3q and fwd
"Sun City just started operation in September, middle of September [so it] just started to ramp up… not full speed ahead yet and we see some potential... our strategy is due to looking to more larger and quality turnkey operator, getting into Altira whereby we've already optimized some of the largely -- the table, VIP table in Altira already... next step is [bringing in big tours] you'll see improvement going fwd."
Are you being paid to tout that forum?
Call it prejudicial, and i rarely scan that forum, but most of the posting there is from the LVS' cheerleader club comprised of the old guys from the yhoo board... Only a few can handle anyone offering contrary perspective (those few are refreshing) and most of those guys have been calling LVS the only stock to own in the group since $83 (they did the same thing in 2012 at $72 on the way back to $36, and then cheered Shel's Spain ambitions and then tried to dis quality posters from ignorance for pointing out the folly of that empire building idea). Further, I've never seen any of them remotely discuss hedging/taking gains or do anything except attempt to put LVS' competitors down as witness mr taxxx and his pals trying to dis MPEL and its Studio City there and right here on this board without realizing that the table allocation issue creates ridiculously unnecessary FUD for all developers building the 8 new properties on Macau... yeah... even LVS' Parisian has the problem -- assuming they can continue to overcome their construction permits/approvals and macau protest problems they seem to encounter of late.
Here readers have several quality posters discussing relevant pros and cons, including grftt and drjackcar, and putting just matrixtrade and his little friend mytek/blacknite/tahoe/nycdolt and the rest of the aliases those little girls on AOL, aka putzes, on ignore renders a very clean and worthwhile board.
As for the kindaguyheam you have so much concern about? His posts don't add much to any meaningful conversation or analysis, but at least he has a sense of humor, and once in a while a new alias of his even has something of relevance to share...
Have a look at the Sep Q 13F filings -- fun if you are long. 20 of the top 25 Holders (incl 11 of the top 15) added shares during the Q, dwarfing sales of the top 25 MM.
Consider that during the Q this stock dropped hard from a high of $36 to $27 -- the low -- at the end of the Q. Seems we are not the only ones realizing that the sky is not falling on China or Macau, and that still some 80% of VIP GGR remains intact while mass is still growing YOY, that MPEL is better positioned than ANY OTHER Macau name, Manila is likely to generate more revenue than the ~$30m/Q opex cost of COD Manila (and might even have a little bit of ROIC on top of that? LOL) and that Beijing and Macau officials will soon be under increasing pressure to back off the bs witchunt, especially since the "corruption crackdown" reviews have yielded less than 1% (690) of some 75,000 suspects and politicians investigated through President Jinping's September report, and the political benefit of chasing the bad guys is soon going to collide with budget and spending cuts in and around Macau -- i.e., unless they soon wind up the witch hunt, tell citizenry it is okay to game in Macau (remember, half of house winnings are collected as tax revenue for Macau) the table allocations and all the rest.
So, prior to Xi's visit in December, might the recent $24 low get retested? It's possible, but fun to point out the stock (and the group) is rallying into the worst growth numbers in years in November and while all of the sellside analysts are throwing in their dirty towels now (shades of early Fall 2012 as said prior here), the reassuring (for other pm) 13Fs show all that there are literally dozens of serious buyside players doubling down or coming back onto the stock with vigor, and they will be buying all people will short to them... and those with offset shorts/hedges still on will pull them once the RIP higher gets going.
Have a good weekend longs. MPEL's RSI ought to be fun into the Feb report...
see ggrasia article titled "Macau govt drafts cautious budget on weaker GGR: Chui" for a nice update to this line of thinking...
84% of Macau tax revenue is directly from gaming... a they say increased tourism is helping "other" sources of revenue? The new regime needs to be very good taking care of the Golden Goose that gaming represents -- not just for the existing Integrated Casino Resorts, but also for the second wave of 8 projects currently under development Macau, and even moreso for the entire development effort surrounding Macau.
As said on other threads, they can wish in one hand that they had focsued more on diversification prior to having the entire Macau land bank committed, but that is like wanted to stuff a large elephant into a small tutu and asking it to dance on a tiny stool. LOL
Macau is all about gamng, whether they want to publicly acknowledge that or not... and EVERYONE paying attntion can see that MPEL has emphasized "entertainment" in their thoughful property development better and to a greater extent than any other company has on Macau. Good news when it comes to renewing gaming licenses and when the govt decides to cut the bs on table allocations since they need about 10x what the unenforced "3% annual ave guldeline" represents out to 2022 -- and they need to grant most of that over the next 3 years as the "second wave" of 8 new properties is opened to the public.
it is time for an end to the table allocation bs this guy made into a joke... Macau is all about gaming and gaming revenue for Macau, and the few companies (LVS, MPEL and WYNN) actually incorporating MCE (LVS) or quality entertainment (MPEL) and say WYNN's 8 acre lake as additive to the scene there are truly adding to the "big casinos" most companies have built there desrve at least their fair share of tables...
Enjoyed your post on Francis Tam yesterday... he should be gone already and hope you are right because a fresh start will eliminate the bs re table allocations. "Fair and reasonable," sans political bs, is where local officials and Xi need to land as discussed on other threads.
Re my comment on yhoo:
Final comment we'll share on yhoo as discussed OT here with grftt) We doubled this on the way up at $39 last week, but yhoo is a great trade after the cfo's comments last night about enhancing yhoo share value by doing something tax efficient when they are at liberty to do so. They are locked out until 12 mo from the ipo, but they can do the certificate spinoff as soon as the new tax year if one reads through the cfo's encryption and then Marissa commenting "we let you know [the structure for spinning BABA] in january." With BABA at $95, the implied tax free value of the BABA shares is $38+, leaving YHOO Japan, tumblr and the other recent acquisitions to round out another $12 or so... and legacy YHOO comes "free" on SOTP.
In short, we think this roars to $50 if BABA powers to $100 soon, and if BABA just flatlines at $95ish, yhoo should get to no less than $50 by the Jan update. As with mpel, we'll suggest spec capital only."
fwiw, we just sold this small (as shared here, 12k with basis just below $39) at $51.40... it should continue to run though. With BABA at $115, the BABA shares they hold are worth $45/yahoo share (ignoring tax complexities). The upshot is that yhoo Japan is worth the spread to $51, so yhoo U.S., junk that it is, still comes free despite the $12+ run up since we put the position on as discussed here.
Good to see a little firming on the Macau stocks despite the ongoing mounds of bs and Jingping's ongoing witch hunt. And still 80% of VIP play continues... and as told by the MPEL guys, (and other companies) premium mass data is now impossible to compare vs PY and other companies, but still going along well.
missed your post amongst all of the little girl on AOL nonsense from matrix and his little mutlialias pal from Cambodia. LOL...
Manila is going to be better than the "not much" perspective the street has on this venue... last Q MPEL had $30m of opex for this site as they ramped up their ~5k employees training and operational preparedness... does anyone here, even little girl matrix and his multialias pal, think COD manila will not cover the opex nut plus their minimum hurdle on 20% ROIC once up the ramp? Anyone who thinks that ought to be short all they can muster down here at the mid 2013 low. LOL
This putz calling cronjm's comments "dumb" is a F riot and ironic as the day is long in summer at the North Pole.... Jim is one of the brightest, long time quality guys posting here, and 9the 98 is a F tool, whether it was his call for monetary stimulus causing economic collapse 18 months ago, the inanity between then and now, or now saying "The VIP's are not going to come back." His blithering inanity is right up there with matrixtrade, the geezer darling little girl on AOL and his multialias dipchit pal for having nothing to say worth reading. LOL
As for "The VIP's are not going to come back," if 9the 98 is not mentally impaired, he must mean the guys who (a) took themselves out with a jump off a tall building, (b) those who are corrupt and know Jinping's process will eventually run them down, (c) those who have fled China and hope the new extradition arrangements to bring them back for prosecution will remain on the run, or (d) those who are simply afraid of the unknown review process and wonder if they will get dragged down by their former business dealings with one of the crooks.... As for the ongoing corruption review, yeah, those taking bribes and getting "gifts" for political favors will be found out... bank account reviews without need for a sobpoena means that crooks will need to find a different country to be crooks in. LOL
But talk about "dumb comment"... dthe98 says that "The VIP's are not going to come back" when fully 80% of peak VIP tours operations are still running, even at the present nadir levels. (Incidentally, am I the only one who processed that Altira saw an increase vs June Q? LOL ) What happens when Xi Jinping visits in December, does this putz really think Xi is coming to say ~"the rest of you awipes should never come here to game again?" Wonders never cease...ROTFLOL at what a tool will write.
BABA is listed here in the U.S. Jack Ma's biggest new initiative to expand BABA's revenue pie is to establish alliances with Western companies/products, particularly those from America... Chinese people want aspirational American brands, and Jackl is signing up counterparties to make that happen from a distribution standpoint.
You mention MPEL has a "major advantage" by being a "china-based" stock... the shares are listed in HK all right, but they typicall trade less than 1% of the market value of shares traded in the U.S. as ADS on the "MPEL" symbol...
As for "bringing everything [else] home", if you have been following the APEC news for the last couple of years, and pointedly here, Jinping's speeches with world leaders and the consortium this week, they want to expand multilateral trade and eliminate import/export duties as much as possible these days in support of maximizing world growth -- obviously, with a special intent on the AP region.
Beyond those realities (not opinions), the fact that Lawrence Ho has his dad's legacy certainly does not hurt MPEL when it comes to consideration of expansion, permits, license renewals and the like... Lawrence is observably well-connected in that regard.
It has been apparent since Zhou and Chen's takedowns in late July that Jingping's political witchunt and "investigation" (a bank acoount rundown and review or cars/houses and club memberships) of 75,000 and counting potentially corrupt officials and "shady deals" would chill EVERYTHING about revealing financial wherewithal, including high roller gaming in Macau. The fear of the "caught" 690 implicating others is fully engaged now too. It is also apparent that the chill effects will continue as long as the "tigers and flies" eradication program continues.
What is still not processed by the sellside or the media parroting their cheesy "analysis" is that still 80% VIP play in Macau continues... and mass play remains solid based on the reliable data available. For last week after the shifting table counts between premium mass and VIP? That is like driving with a paper bag over one's head as mass totals and premium mass data comparability has been turned on its head with the smoking ban confusion and redesignations between premium mass tables vs VIP, so hard to say just what is happening with non-corrupt, non-spooked players on the direct credit side after September Q.
What do we know about mass/premium mass? Through Sep, total mass was UP 24% at COD yoy vs total market UP "only" 16% (UP, NOT DOWN). Did you see where machine play was up 25% (!) for MPEL last Q? Notably, MPEL's repositioning of Altira is now making progress on VIP there and MPEL's soft RC hold overall accounted for ~half the ebitda ease for the Q. MPEL's 3q #s also bear the burden of just shy of $30m of operating exp (incl 5k employees now) for Manila without any commensurate revenue until next month. All in, a solid report from mpel.
Perhaps some of the modest lift since the now double bottom low around $24 has something to do with APEC tone/tension easing, the buyside realizing these dynamics mean that teams the sky has not fallen in on Macau or this company, and MPEL's catalysts in 2014.
Yes it is very good news,especially since others are slipping despite trying to be more mass focused in MPEL's trailblazing path.
I've made the point before, but last year's numbers included the surge based on LVS' new properties coming up the ramp after introduction in 2012. Next year will include the new Galaxy and Studio City properties coming online... and just maybe Xi will make it clear that the new "office of corruption detection" or whatever they call it, is going to be focused on making sure shady dealings and bribes are largely a thing of the past with the 690 found to be corrupt out of the 75,000+ politicians investigated so far. What is the ongoing review? From now on, anyone making $60k/year as an influence peddler ought to be afraid of having far larger money flows into his bank accounts, showy cars, homes and lifestyles, and memberships to the "private clubs" now being monitored by wary eyes.
repeating myself, hopefully Xi is going to be bringing the "gift basket" to macau in December, but also more of the conciliatory tone he has been directing at world leaders during the APEC meetings this week. Macau will quickly be back to normal if that happens... and continue to "limp" along at 80% of peak 2013 VIP and single digit mass growth otherwise...
Hey toast and jim,
Barron's blogger article suggests shanghai trading is it, but the Asian exchange volumes are trivial vs ADS trading here.. An alternate view is that it seems likely more than trivial optimism is coming out of the APEC tone setting by President Xi Jinping. His "let's all get along" tone setting and private as well as group meetings between China and its long-disputed trade, territorial and other issues with Japan, Taiwan, Vietnam and the Phillipines have all been the subject of upbeat press reports this week. Same as for meetings between Obama and Putin, and Xi with both of these guys and other leaders. Side bars galore on Xi talking about China growth "slowing" to 7% as an integral part of their remaking of their economy (service/consumerism vs production), intellectual property, innovation and technology sharing are also in the mix there...
Goog title for full article, but IBT and FT are also covering these stories on global sentiment:
Xi Jinping pushes China's FTA vision as APEC leaders meet
By PTI | 11 Nov, 2014, 03.11PM IST
[btw, Xi's "foxhunt" started in july... gee, d'ya suppose that since many of those absconding with money from corruption in china went to the U.S. might have stopped playing in Vegas about the time they began chasing the foxes out of their foxholes in July? Funny how the "Vegas resurgence" nonsense being touted by 4-5 of the weakest analysts in this weak analyst group all shut up about Vegas' recovery when tables games revenue actually went to negative 12% in August. Regardless, good to see the U.S and Xi holding hands on trade agreements, bilateral extradition treaties to send the bad guys and their money back to China, and the optimism tone set by Xi for the APEC Summit beginning today... Perhaps as soon as with Xi's visit in Dec Macau get have a fresh start without the FUD cast over China (and VIP play) as the crackdown on historical corruption wends it way to the logical end and the new office tamps out future abuses creating all of the FUD throughout China (and having nothing to do with Macau per se.]
"Fellow APEC member Australia is taking part in operations with China to seize illegal assets, while China has sent investigators to Thailand, the Philippines and other nations.
The call for more bilateral extradition treaties highlights the fact that China doesn’t have agreements with the countries it says are the top two destinations for economic fugitives -- the U.S. and Canada.
“Corruption not only creates an unfair playing field, it not only distorts economic relationships, but corruption steals from the people of every country the belief that the system works for everybody,” U.S. Secretary of State John Kerry said at a briefing in Beijing after the deal was announced.
China’s official Xinhua News Agency reported last month that the country had captured 180 economic fugitives from 40 countries and recovered billions of dollars in assets."