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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

LVS, WYNN, MGM, MPEL, CZR, MTN, H, HLT

EVENTS TO WATCH:  UPCOMING EARNINGS/CONFERENCES 

TODAY, March 6

  • Todd in Boston       

Friday, March 7

  • Employment Report for February 

Monday-Thursday, March 10-13

  • 2014 Cruise Shipping Miami Conference

Monday, March 11

  • CZR 4Q 2013 conference call

Tuesday, March 12

  • MTN FY2Q 2014 conference call

Friday, March 14

  • Hyatt Investor Day

COMPANY NEWS

LVS:  Las Vegas Sands executive Chris Cahill resigning 
LVS executive vice-president of global operations, Chris Cahill, is resigning.  Cahill oversees the company’s property operations, corporate marketing and human resources, among other things.  LVS gave him a 5-yr contract in April 2012. 

 

Takeaway: We're not reading anything into yet but other companies seem to be poaching some LVS personnel.  

OEH: Selling an asset 

The Inn at Perry Cabin, featuring 78 rooms, will be sold for $39.7 million. 

Takeaway:  We applaud managements efforts to sell an asset, not officially listed for sale, and we expect any cash proceeds will be used to reduce outstanding debt. 

HLT: Announced additional hotel in Saudi Arabia

Hilton Worldwide announced a signing agreement with Al Jazeera Group, for a new 180-room Hilton Al Ahsa, Kingdom of Saudi Arabia is expected to open in 2016.

Takeaway:  Continues the company's plan to increase the non-US hotels and room count. 

INDUSTRY NEWS

JAPAN:  Bill delayed 
One of the legislators, Takeshi Iwaya, spearheading the bill to legalize casinos in Japan says passage might be delayed.  Iwaya said he is extremely worried the bill might not get passed mid-year despite cross-party support because of procedural issues.  Iwaya did comment on potential projects, saying ideally foreign casino operators would join forces with local Japanese companies on projects.   Japan needs the expertise and knowledge of foreign companies, but foreign operators might have trouble adapting to Japan’s particular characteristics, he said.

 

Takeaway:  We believe such statements are merely efforts by Japanese officials to "save face" while also reaffirming the keiretsu business structure.  However, it seems that Japan is a huge focus for investors and expectations are high for passage of favorable legislation this year.

MACAU:  Work on new border crossing to start in 2015
Work on the new border crossing in Ilha Verde will start halfway through next year and should be complete in 2016.  The new crossing will be open 24 hours a day. 

 

Takeaway:  One of many transportation infrastructure developments that should help the Mass business 

BERMUDA: May pursue online gaming

Finance Mister David Burt suggested Bermuda establish a legislative committee to examine rules and laws for creating an on-line gaming industry.  Bermuda, home to many corporate headquarters as well as the reinsurance industry, is a preferred corporate domicile due to its favorable tax laws and positive business environment.  

Takeaway:  Bermuda with its strong infrastructure (telecom and data centers), coupled with favorable tax laws has the potential to become the next Cyprus for online gaming.  Additionally, the easy air travel access is a major advantage as compared to Cyprus.  

MACRO 

Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive. 

Takeaway:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.