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DIAL IN & MATERIALS: HEDGEYE'S BEST IDEAS. PERIOD.

Valued Client,
 
5-10 minutes prior to the 11AM EDT start time please dial:

(Toll Free) or (Direct)
Conference Code: 198252#
  

Materials: "BEST IDEAS. PERIOD."

                 
To submit questions for the Q&A, please email .

****************************************************************************** 
   

"BEST IDEAS. PERIOD." 

   

We invite you to join us TODAY, Friday, November 11th, for our first-annual Best Ideas call. We will be outlining the top investment ideas, both long and short, across each vertical of our world-class research team. In aggregate, we will offer more than ten unique and differentiated investment ideas for the intermediate term.

 

 On the call will be:

    

·         Keith McCullough, CEO

·         Daryl Jones, Macro

·         Brian McGough, Retail

·         Todd Jordan, Gaming, Lodging and Leisure

·         Howard Penney, Restaurants

·         Tom Tobin, Healthcare

·         Josh Steiner, Financials

  

ABOUT HEDGEYE

Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering actionable investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing. The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service. For a complete listing of our sector head bios, please click here: https://www2.hedgeye.com/pages/team

 

Please contact if you have any questions.  

Regards,

 

The Hedgeye Macro Team

 

https://app.hedgeye.com/feed_items/16762

 

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DIAL IN & MATERIALS: HEDGEYE'S BEST IDEAS. PERIOD.

Valued Client,
 
5-10 minutes prior to the 11AM EDT start time please dial:

(Toll Free) or (Direct)
Conference Code: 198252#
  

Materials: "BEST IDEAS. PERIOD."

                 
To submit questions for the Q&A, please email .

****************************************************************************** 
 

 

"BEST IDEAS. PERIOD." 

   

We invite you to join us TODAY, Friday, November 11th, for our first-annual Best Ideas call. We will be outlining the top investment ideas, both long and short, across each vertical of our world-class research team. In aggregate, we will offer more than ten unique and differentiated investment ideas for the intermediate term.

 

 On the call will be:

    

·         Keith McCullough, CEO

·         Daryl Jones, Macro

·         Brian McGough, Retail

·         Todd Jordan, Gaming, Lodging and Leisure

·         Howard Penney, Restaurants

·         Tom Tobin, Healthcare

·         Josh Steiner, Financials

  

ABOUT HEDGEYE

Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering actionable investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing. The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service. For a complete listing of our sector head bios, please click here: https://www2.hedgeye.com/pages/team

 

Please contact if you have any questions.  

Regards,

 

 

The Hedgeye Sales Team

 
HEDGEYE RISK MANAGEMENT                                                       
111 Whitney Avenue
New Haven, CT 06

www.hedgeye.com
 
 


DIAL IN & MATERIALS: HEDGEYE'S BEST IDEAS. PERIOD.

CALL TODAY, NOVEMBER 11th, 2011, 11AM EDT

 

Valued Client,
 
5-10 minutes prior to the 11AM EDT start time please dial:

(Toll Free) or (Direct)
Conference Code: 198252#
  

Materials: "BEST IDEAS. PERIOD."

                 
To submit questions for the Q&A, please email .

****************************************************************************** 
   

"BEST IDEAS. PERIOD." 

   

We invite you to join us TODAY, Friday, November 11th, for our first-annual Best Ideas call. We will be outlining the top investment ideas, both long and short, across each vertical of our world-class research team. In aggregate, we will offer more than ten unique and differentiated investment ideas for the intermediate term.

 

 On the call will be:

    

·         Keith McCullough, CEO

·         Daryl Jones, Macro

·         Brian McGough, Retail

·         Todd Jordan, Gaming, Lodging and Leisure

·         Howard Penney, Restaurants

·         Tom Tobin, Healthcare

·         Josh Steiner, Financials

  

ABOUT HEDGEYE

Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering actionable investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing. The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service. For a complete listing of our sector head bios, please click here: https://www2.hedgeye.com/pages/team

 

Please contact if you have any questions.  

Regards,

 

The Hedgeye Macro Team


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THE M3: COTAIJET; CHINA OCTOBER BANK LOANS

The Macau Metro Monitor, November 11, 2011

 

 

COTAIJET WELCOMES TAIPA COMPETITION Macau Daily Times

“We see little impact to CotaiJet,” the company’s COO, John Seale said.  “In fact, we will see increased competition because if the relocation or shut down does occur, other ferry service operators will also be moving to Taipa,” he added.

 

Seale believes changes to the ferry terminal situation will not harm Sands China. “We do not see any impact on our business in general,” he said.  Seale is also unconcerned for Sands Macao casino, located near the Outer Harbour Ferry Terminal. “Sands has been in the market for over seven years and has a very established customer base,” he emphasized.

 

“Our view is neutral,” said John Seale. However, Sands’ non-executive director Michael Leven said last month the company would “still like the [Outer Harbour] terminal to stay open as long as possible”.

 

IN SIGN OF EASING, CHINA OCTOBER BANK LOANS REBOUND Reuters

Chinese banks lent 587 BN yuan ($92.5 BN) of new loans in October, +25% MoM and flat YoY, evidence of "selected" policy easing by the government to support growth as inflation falls.  China's M2 money supply eased to 12.9% from 13.0% in September.  The median forecast by economists was for an issuance of 500 billion yuan in October and a 13.0% rise in M2 last month.


THE HBM: SBUX, MCD, COSI, WEN, BOBE

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

University of Michigan Consumer Confidence comes out today at 09:55 a.m.  We’ll be watching for any indication of a further slump in confidence although, at least for the restaurant space, confidence hasn’t seemed to matter lately although it may begin to matter if it slumps much lower.

 

THE HBM: SBUX, MCD, COSI, WEN, BOBE - umich survey vs actual

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: SBUX, MCD, COSI, WEN, BOBE - subsector fbr

 

 

QUICK SERVICE

 

SBUX: Starbucks announced the acquisition of juice company Evolution Fresh for $30 million in cash.  The company hopes that the purchase will help Starbucks gain a foothold in the estimated $50 billion health food market.  We believe that the company's strategy is to capture the upside in profits by owning these small brands in tangent categories.  Starbucks' distribution channel provides a clear runway for these brands to grow rapidly.

 

SBUX: Starbucks is targeting 20% of customers in Malaysia to use the newly-launched pre-loaded Starbucks card.  A spokesman for the company said that the card is a stored value card that offered customers convenience when purchasing merchandise at any Starbucks store nationwide.

 

MCD: McDonald’s is looking to capitalize on the depressed commercial property market and purchase more of the land and buildings where it operates, according to management commentary during an investor conference yesterday. 

 

COSI: Cosi issued a letter to Brad Blum yesterday saying it would welcome his offer to lead the company for $1 if it were “sincere”.

 

WEN: Wendy’s was maintained “Overweight” at Barclays.

 

 

CASUAL DINING

 

BOBE: Bob Evans Farms was downgraded to Equal Weight from Overweight at Stephens.

 

THE HBM: SBUX, MCD, COSI, WEN, BOBE - stocks 1111

 

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst


GENTING'S SPOOKY QUARTER

Spooking investors of other stocks as well.

 

 

Misery loves company.  Perhaps that's the reason why Genting spooked the market with commentary on the China credit situation after reporting a quarter with no volume growth and a large impairment charge partly ‘saved’ by high hold.  That comment certainly had an impact on the Macau stocks in yesterday's trading.

 

This marked the 3rd quarter in a row where RWS lost share in RC volume, Mass drop, and slot handle.  Rebates on Mass and VIP also increased this quarter while RevPAR decreased QoQ as did visitation to USS.  Will a new hotel with just 200 high end rooms, some neutered junkets (should they ever get approved), and the opening of a Marine Park and Museum significantly improve the static trends we’re seeing or will this property continue to be a share loser?

 

 

Detail

 

Revenue was 4% lower than our estimate while EBITDA was 14% below our estimate

  • Net gaming revenues were S$24MM below our estimate.  We estimate that GGR for RWS was S$975MM, implying 48% market share as the company stated on the call and that rebates, GST and gaming points (mass comps) were S$315MM.
    • Per company commentary and our calculations:
      • RC Volume market share: 44%
      • GGR share: 48%
      • Mass and slot share: 48% (roughly the same for slots and mass tables)
      • Gross VIP accounted for 53% of RWS’s GGR and 42% on a net basis
    • Total market GGR was S$2.04BN – a little below our estimate of S$2.1BN, which explains a large part of the miss
    • Gross VIP win was 7% below our estimate due to no sequential growth in RC volume, somewhat offset by better hold.  It’s disappointing to see RC decreases since 4Q10.  Management said that RC volumes were flat QoQ; our guess is that there was a slight decline to S$16.3BN.
      • Hold since opening has been 3.1% at RWS.  However, if we use the theoretical win rate of 2.85%, gross VIP revenue would have been S$52MM lower, and net VIP would have been S$49MM lower and EBITDA would have been S$46MM lower.  Of course, the high hold was offset by the bad debt charge of S$38MM which is ‘unusually’ high.
      • We estimate that rebate rate increased to 1.34% - a 10bps increase sequentially.  The company claimed that there was no change in rebate policy, but the numbers don’t lie; rebates clearly increased.  It could be that there were just less players that gambled greater amounts getting them higher rebates.
    • We estimate Mass win of S$308MM, 10% above our estimate due to better hold
      • Mass drop was flat sequentially around S$1.4BN.  Genting said that hold has continued to trend upwards for mass play.  We estimate that hold was 22%.
      • Gaming points increased to 4% of drop from 2.4% last quarter or a total of S$57MM
    • We estimate slot win was S$150MM and that handle ticked up slightly to S$3.1BN
  • Non-gaming revenue was S$12MM below our estimate due mostly to lower USS revenues
    • Given the results at MBS, we were surprised to a see a sequential RevPAR decrease at RWS – especially after all the talk of being room constrained.  Yes, MBS gives away rooms to gaming customers and perhaps RWS should follow suit on the 10% of vacant rooms that they have – especially midweek.  Location surely has something to do with the lower occupancy as well.
    • USS park revenues were S$9MM below our estimate given a material decline in QoQ park visitation
  • We estimate that fixed expenses were S$182MM in the quarter

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