- Tues-Thur June 17-19: Todd in Singapore & Macau for meetings
- Wed-Thurs June 18-19: Hedgeye Cruise survey (pre-CCL F2Q)
- Thurs June 19: LA May revs released
IGT –two interesting press releases early this morning...
- IGT regularly considers, and on occasion explores, a broad range of strategic alternatives, including but not limited to business combinations, changes to our capital structure and adjustments to our portfolio of businesses, with the goal of maximizing shareholder value. The IGT Board of Directors and senior management are currently engaged in such an exploration, but no decisions have been made by the Board regarding any particular alternative available to the Company and there can be no assurances that any transaction or other strategic change will be entered into as a result of the current exploration of alternatives. IGT does not intend to discuss or disclose developments with respect to this general subject unless and until the Board has approved a definitive course of action.
- GTECH (GGTK.IM) announced that it is engaged in preliminary, exploratory discussions as part of a process regarding a potential transaction with IGT. GTECH noted the transaction could potentially involve the use of a mix of cash and equity as consideration. However, the Company does not anticipate that a capital increase for cash will be required.
Takeaway: Let the bidding begin...we believe IGT is worth $18-$22/share per our conference call last week.
Summit Ascent – approved the acquisition of an additional interest in a casino resort in Vladivostok Russia. Summit Ascent will pay US$20.2 million to Elegant City Group Ltd, an entity controlled by Russian businessman Oleg Drozdov, in order to acquire a 14% equity stake in the project. Elegant City will keep a 15% interest in the casino resort. Summit Ascent now owns 60% in the casino resort.
Takeaway: The initial development agreement called for Summit Ascent to receive a management fee of 3% of GGR on Phase 1 which included a casino with 25 VIP tables, 40 mass tables, and 800 slots, as well as a 199 room hotel located on Lot 9 of the development.
SINO.PM – Philippine-listed Sinophil Corp is changing its name to Premium Leisure Corp. On June 6, Belle Corp announced it would reorganize its gaming assets under Sinophil, including its ownership of Premium Leisure and Amusement Inc, and its shares representing 34.5% of online lottery system provider Pacific Online Systems Corp.
Takeaway: We wondered when SInophil would change its name to a moniker more reflective of gaming or leisure.
UnionPay – (LUSA) citing Macau police sources, the new agency reported the value of transactions using unregistered China UnionPay Ltd terminals in Macau amounted to MOP180 million (US$22.5 million) between January and mid-May 2014.
Takeaway: If accurate, the $22.5 million represents a mere 36 basis points of total mass GGR and 12 basis points of overall total revenue.
Iowa Gaming Expansion – following the issuance of the 19th commercial gaming license by the Iowa Racing & Gaming Commission last week, IRGC Chairman Lamberti indicated the Commission may consider a moratorium on additional gaming licenses at the July 31 commission meeting.
Takeaway: The moratorium seems like a reasonable decision given the saturation of gaming within Iowa.
Germans' appetite for short trips lifts European cruise industry (CLIA) – Europe's cruise lines passenger growth rose in 2013 due to the popularity of the Mediterranean as a destination and Germans' appetite for short trips in northern Europe. Germany saw a 9.2% rise in passengers, drawing level with Britain as Europe's largest markets, with each accounting for around 27%.
Takeaway: While there are probably too many short itineraries in the Caribbean, there may still be opportunities to expand in Europe
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.