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Tickers: LVS, PENN, GLPI, CCL, NCLH

EVENTS

  • July 23:  TRIP 2Q call (430pm)
  • July 24:  
    • WYN 2Q call (830am)
    • PNK 2Q call (9am)
    • LHO 2Q call (930am)
    • PENN 2Q call (10am)
    • HOT 2Q call (1030am)
  • July 25:
    • PEB 2Q call (9am)

COMPANY NEWS

590:HK – Luk Fook Holdings Ltd saw its same store sales growth drop by 54% in Macau and Hong Kong in the first quarter of 2015 (a period between April 1 and June 30, 2014, according to a filing with the Hong Kong Stock Exchange) over that of the same period a year earlier. Same store sales of gold products declined 65%, gold sales by weight dropped 63%, while gem-set jewellery dropped 20% for the group’s stores in Macau and Hong Kong. At the end of June, Luk Food Holdings had 1,290 licensed stores around the world, an increase of 22 stores year/year, of which 83 were in mainland China, 44 in Hong Kong and 10 in Macau. 

Takeaway: Confirmation of a Chinese spending slowdown and slower Macau trends.

LVS & 1928:HK – Macau Boxing Card Set, Filipino boxer Manny Pacquiao will fight Chris Algieri, an American junior welterweight titleholder, on November 22 at the Venetian Macao’s Cotai Arena.

Takeaway: Setting the stage for a big weekend in Macau.

PENN & GLPI – Argosy Sioux City filed an appeal with the Iowa Supreme Court to keep the riverboat casino from closing next Tuesday. Attorneys for Argosy parent Penn National Gaming Co. asked the Supreme Court for an immediate, emergency stay of a District Court judge's ruling Monday that affirmed a state gaming regulatory order to shutter the gambling boat. Argosy argues the district court order, like the IRGC ruling it affirmed, "is based on errors of law and is not supported by substantial evidence."

Takeaway: Last and final legal option to keep the property open. We are skeptical the Supreme Court will "take up" the case and the filings contain no new arguments for keeping the property open.

CCL –  (TTG Digital) Cunard reports post-World Cup booking spike  

Cunard has reported a 36% increase in bookings on Monday July 14 and Tuesday July 15 compared with the same two days the previous week.  It added high street agents were also seeing a boost in footfall numbers and it is hoping to drive more business with the summer sale running for the rest of July for holidays departing from September 1, 2014, to June 30, 2015.

Takeaway:  With all the bad commentary surrounding the World Cup, it's good to hear someone benefited.

NCLH – Norwegian Cruise Line is offering free balcony upgrades and up to $200 credit for select sailings booked by Saturday, July 19. These "Sun & Fun Free for All Bonus Days" price breaks can be applied on top of other discounts,

Takeaway:  Incentives keep coming.

INDUSTRY NEWS

Macau Slot Monitoring – Macau’s Gaming Inspection and Coordination Bureau (DICJ) is considering asking casino operators to provide enhanced surveillance – via video security camera – of slot machine jackpot displays

Takeaway: More regulations for an already highly regulated industry.

Hengqin Island Land Allocation to Macau – The Guangdong Province governor, Zhu Xiaodan, revealed during yesterday’s annual Guangdong-Macau Cooperation Joint Conference that a “Macau area” measuring 10 square kilometers will be established on Hengqin Island. However, no details of cooperation were disclosed. Mr Zhu suggested that the project would have to wait until the land is reclaimed before any concrete negotiations can begin.

Takeaway: We expect to see the gaming operators begin selling reasons why they should be allocated a portion of this land to support their Macau base of operations.

Resorts World Manila – Travellers International is a joint venture between Philippines-based Alliance Global Group Inc and Genting Hong Kong Ltd, a subsidiary of Malaysia’s Genting Bhd confirmed the second phase of Resorts World Manila, which includes the expansion of the Marriott Hotel Manila and the addition of 227 rooms, should be ready by the end of 2015.

Takeaway: On time opening

Ho Tram Strip – Private equity firm NewCity Capital LLC is to be a “new financial partner” in the Ho Tram Strip beachside casino development according to Asian Coast Development (Canada) Ltd (ACDL) but further details were not disclosed. NewCity Capital, founded by American investor Chien Lee, is investing via a vehicle called NewCity Ho Tram Investment Co. It has also set up an entity called The GrandNewCity. Full build-out of the Ho Tram development is a US$4-billion project with up to five integrated resorts, encompassing 9,000 five-star rooms, and 180 tables and 2,000 electronic gaming machines in two casinos. 

Takeaway: Maybe this project finally gets off the ground?

Georgia Casino Boat Runs Aground – the Escapade, a casino boat ran aground off the Georgia coast during its maiden voyage on Wednesday. The 174-foot-long Escapade was still stranded about 1.8 miles off the north end of Tybee Island, a popular beach destination east of Savannah, in the Calibogue Sound near Hilton Head, South Carolina. The Escapade is a casino ship operated by Florida-based Tradewinds Casino Cruise. After being stranded for more than 15 hours, about 90 of The Escapade's 96 passengers and 27 crew members arrived at the dock shortly after 4 p.m., nearly a full day after the boat left for the maiden voyage of its operator's new Savannah service Tuesday night. Four people were ferried ashore by helicopter

Takeaway: First day operational challenges.

Texas Gaming Expansion – The Texas Gaming Commission begins weighting slot machine type devices at racetracks. The issue came before the commission last month, proposed by the industry, and members decided to let Texans weigh in on the issue. A 30-day public comment period continues until July 27, and the issue could come before the commission for a vote as soon as Aug. 12. This electronic racing, which would be displayed on machines similar in size and appearance to slot machines, would randomly replay races that have already been held but stripped of any information — such as horse names, dates, location — that could identify which race it was. Any expansion of Texas gambling would require approval from two-thirds of lawmakers in both chambers of the legislature — as well as from Texans. Commission officials say they have looked into the issue and a rule change to allow instant gaming isn’t an expansion of gambling.

Takeaway: Could this be the first step forward for legal gambling in Texas? The long-term threat to Louisiana and PNK persists.

 

Insider Transactions:

ISLE - CFO Eric L. Hausler sold 6,200 shares on Monday, July 14th via a 10b5-1 plan at an average price of $8.57 and now owns 54,733 shares

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.