THE LEISURE LETTER (3/11/2014)

BYD, CCL, PENN


EVENTS TO WATCH:  UPCOMING EARNINGS/CONFERENCES 

 

TODAY

  • REGENT cruise lines 4Q 2013 conference call:  
  • CZR 4Q 2013 conference call:  5 pm (36895079)
  • STN 4Q 2013 conference call:  4:30 pm  

Monday-Thursday, March 10-13

  • 2014 Cruise Shipping Miami Conference

Wednesday, March 12

  • SGMS F4Q 2013 conference call:  5:00 pm (pw: 36357318)
  • MTN FY2Q 2014 conference call:  4:30 pm

Friday, March 14

  • Hyatt Investor Day

COMPANY NEWS

BYD - Activist investor Elliott Management and EICA disclosed a 7% and 5% in BYD, respectively.

 

Takeaway:  We welcome activist involvment in BYD as operating change needs to be made. Margins and win per position have lagged the competition. With the right operating team in place, we estimate BYD could enhance EBITDA by $110 to $150 million, or $8 to $10 of equity value.  

 

CCL - Another sickness outbreak on 'cursed' cruise ship Oriana Southern Daily Echo

P&O Oriana has suffered yet more problems after norovirus broke out for the second time in a week.  The ship is due to dock in Southampton on Thursday.   So far 4 of 1,740 passengers returning from on its Northern Cape winter cruise have been struck by the highly contagious bug.  On March 2, the liner was delayed by 12 hours leaving Southampton on March 2 after 57 previous passengers went down with Norovirus and the ship had a broken propeller.

 

Takeaway: Terrible luck for P&O Cruises UK (CCL brand)

 

PENN –will break ground on Plainville casino on Friday

 

Takeaway:  PENN moving quickly to open what should be a high ROI property, even with a 49% gaming tax rate

INDUSTRY

No more than 6 gaming licensees post-2020 Macau Business Daily

Secretary Tam says there “should be no increase” in the number of gaming concessionaires – six at present – allowed in the city’s gaming market following the expiry of the current permits in 2020 and 2022.

 

Takeaway:  An obvious positive for current Macau operators 

 

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.


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