Casino Stock Picks: An Exclusive Interview with Carlo Santarelli, Research Analyst with Deutsche Bank Securities

Wall Street Transcript

67 WALL STREET, New York - December 2, 2013 - The Wall Street Transcript has just published its Gaming and Leisure Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: U.S. Regional and Emerging Market Hospitality - Gaming Opportunities In Asian Markets - Macau VIP and Mass Market Gaming - Lodging C-Corporations - Timeshare Industry Recovery - Regional Casino Development

Companies include: Marriott International, Inc., Starwood Hotels & Resorts World, Wynn Resorts Ltd., Las Vegas Sands Corp., Penn National Gaming Inc., Pinnacle Entertainment Inc., International Game Technology, Orient-Express Hotels Ltd., Bally Technologies, Inc.

In the following excerpt from the Gaming and Leisure Report, an expert analyst discusses the outlook for the sector for investors:

TWST: How would you describe the overall health and outlook for the Las Vegas casino operators?

Mr. Santarelli: I think the Macau-focused stories remain really strong. Obviously that market has continued to grow at a robust pace. We have also seen a recovery trade in the Las Vegas-centric names, although most of the money for these guys is being made in Macau right now. Macau is a where you are clearly seeing outsized growth, growth that isn't rivaled in many other areas within the consumer world right now. These stories have become very compelling given the growth and leverage to Asian gaming expansion, underpinned by very solid balance sheets and capital returns, as evidenced by recent returns to shareholders by both Wynn Resorts and Las Vegas Sands.

TWST: And when you look at the companies that are in Macau or levered to Macau, did you see that as a real long-term tailwind?

Mr. Santarelli: Obviously, you start to run into the law of larger numbers in growth rates, and the top line starts to decelerate. Next year will be the first year in quite a long time when we won't have any new openings in the market. With no new supply, operators will have the ability to drive a little bit more profitable EBITDA, with strong mass market gaming fundamentals that carry a higher margin relative to VIP. That being said, the VIP gaming revenue dollar is still 65% to 70% of the total market size, so it drives a lot of the headline gross gaming revenue growth number...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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