Our models refresh every 90 minutes of trading. Here are our new S&P Levels for 11am EST:
Buy "Trade" = 823
Sell "Trade" = 913
Don't allow David Faber at CNBC or your fear center dominate your thinking. Faber is right about Morgan Stanley's liquidity concerns, but he is 3 hours behind us on that call.
• LVS stopped construction on 2 of the 4 towers on Lots 5 and 6.
• Construction remains on the Sheraton and St. Regis towers. We continue to believe construction will pause on these 2 towers as well after they skin the building.
• Shrangi-La and Traders postponed indefinitely and immediately
• Construction of two Cirque theaters on Lots 5 and 6 have been cancelled. The Cirque production teams have been sent home. The Cirque du Soleil show at The Venetian remains intact.
• MPEL’s City of Dreams has moved to a 3 phase opening from a 2 phase opening. Surprisingly, the opening of Phase 1 has been moved up to March 2009. It is our understanding that Phase 1 will include the casino floor and Crown Tower
We’ve been predicting the construction delays on Lots 5 and 6 for some time but incrementally the news is probably a positive for LVS and the Macau market. Less Capex means more cash flow near term. Regarding MPEL, for the City of Dreams to begin generating cash flow sooner is also a positive.
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- The Nikkei should be covered, for a "Trade", anywhere under the 7,127 line.
On the contrary, we still believe Encore Macau may open on the early side of its announced range of first half of 2010. The budget there of $700 million looks very doable.
• Debt at $2.6bn, below estimates
• Shouldn’t bust a covenant in Q4
• Leverage restriction escalates from 6x to 6.5x in 2009 so out of danger zone
• I’m way below the Street on EBITDA and EPS yet I’m still calculating net free cash flow of $1.60 (40% FCF yield) in 2009
My sources indicate October is better in regional gaming markets than September. September could end up being a near term low. Trade looks higher.
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