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Japanese Stocks On The Move

When the Bank of Japan announced its $1.4 trillion stimulus to help boost the economy last Thursday, two things happened: the value of the Japanese Yen plummeted and the Nikkei 225 Index - Japan's version of the Dow Jones Industrial Average - shot up and continues to post massive gains. The Nikkei is up +9.9% over the last five trading days alone and is up +27% year-to-date. That's what happens when a country's central bank starts messing around with the markets, folks.

 

Japanese Stocks On The Move - nikkei225


MACAU: A PREVIEW OF THE PREVIEW

Recently updated Q1 Macau EBITDA and hold adjusted EBITDA projections – MPEL looks great

 

 

Q1 earnings season should be decent for the Macau operators although there are only 2 real standouts – both were impacted by low hold.  On a hold adjusted basis, which is what we care about, MPEL and MGM Macau performed very well in Q1.  Wynn Macau is the only property that looks like it could post a slight miss relative to consensus but that would be on a hold adjusted basis as our projection for actual EBITDA exceeds consensus slightly.

 

MPEL remains our favorite name in the space with the catalyst of a terrific Q1 earnings release looming.  More importantly, the stock remains incredibly inexpensive relative to most Macau names and could be ripe for a 2-3 multiple turn increase in its EV/EBITDA valuation.  As we wrote about in our note “INVESTABLE MPEL” on 03/21/13, MPEL should transition from a trading vehicle to a core long-term holding for many long only investors which should help inflate the multiple to something more realistic:  11-12x (post-opening of MSC).   

 

MACAU: A PREVIEW OF THE PREVIEW - hold3


FIRST WEEK OF APRIL IN MACAU

ADTR up 10% YoY - too early to make any calls

 

 

Daily table revenues (ADTR) averaged HK$847 million during the first 7 days of April, up 10% YoY.  Our full month projection is for GGR of HK$26.5-27.5 billion which would represent YoY growth of 9-13%.  MPEL and LVS are off to great starts.  Still too early in the month to make any real conclusions about trends or market shares.  

 

FIRST WEEK OF APRIL IN MACAU - mmm1

 

FIRST WEEK OF APRIL IN MACAU - mmm2


Early Look

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News From Our Sector Heads

Todd Jordan (GLL):

 

Ambrose So fears H7N9 may affect gaming (via Macau Business)

 

Jay Van Sciver (Industrials):

 

Alcoa 1st Quarter Earnings Conference (via Alcoa)

 

Kevin Kaiser (Energy):

 

Killing Keystone Seen as Risking More Oil Spills by Rail (via Bloomberg)

 

Josh Steiner (Financials):

 

EU antitrust regulators to investigate MasterCard card fees (via Reuters)

 

Citi files Nasdaq claim over Facebook IPO (via Financial Times)

 

Howard Penney (Retaurants):

 

Caribou Coffee Closings: Chain Reveals Massive Nationwide Shutterings, Chicago Area Hit Hard (via HuffPo)

 

Brian McGough (Retail):

 

Ron Johnson Ousted As JCPenney CEO (via Forbes)





PODCAST: The Three Points

 

On today’s Morning Investment Call held for Hedgeye subscribers, CEO Keith McCullough discussed an amalgamation of market catalysts ranging from the risk range of the S&P 500 to what lies next for the yield on the 10-Year Treasury. Keith is still a big buyer of US stocks and the US dollar and a seller of commodities. Remember: get the US dollar right and you get a lot of other things right. His three big points this morning focus on Chinese deflation, the 10-year and recent moves in crude oil. When Brent moves to the downside, it should get your attention



THE M3: SO COMMENTS ON BIRD FLU; CHING MING VISITOR ARRIVALS

The Macau Metro Monitor, April 9, 2013

 

 

AMBROSE SO FEARS H7N9 MAY AFFECT GAMING Macau Business

SJM CEO Ambrose So said the new H7N9 virus could impact the gaming business if by the holiday period its causes are still unknown, and no effective measures are put in place to control it.  Nonetheless, he said he remained optimistic about business during Golden Week, but added that if the H7N9 situation worsens it would be quite worrying.


Business Daily reports that at least one casino operator in Macau is already checking the body temperature of employees arriving at work.  So also said that SJM would consider “strengthening preventive measures” in its casinos against the H7N9 virus – possibly via body temperature checks on guests.

 

In a meeting yesterday, mainland, Hong Kong and Macau officials decided to step up surveillance of live poultry and poultry products, by increasing the sample size and frequency of farm inspections, official news agency Xinhua reported.

 

VISITOR ARRIVALS UP IN CHING MING Macau Business Daily

The number of visitors coming to Macau topped 457,000 during the four-day Ching Ming holidays, up by 4% from the same period of last year, the Public Security Police said.  The first three days of the tomb-sweeping celebration (April 4 to 6) also marked the first trial of a temporary two-hour extension in the opening hours of the Gongbei border.

 

Asked yesterday if the opening hours of Gongbei border would be extended again during next month’s Labour Day Golden Week, Macau CEO Chui declined to reply.  He hopes eventually the border will be open around the clock.


SJM CEO So said longer opening hours in the border was “good” for the gaming industry.  He noticed an increase in the number of people visiting casinos and of chips purchased during the Ching Ming holidays.  But he quickly added that figures for only a few days “cannot reflect a trend” on whether longer opening border hours would boost casino revenue.


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