LEISURE LETTER (08/08/2014)

Tickers: LVS,  IGT, NCLH, PENN, LHO

EVENTS

  • Aug 8:
    • CHH 2Q 10am: , pw: 30848466
    • DRH 2Q 10am: , pw: 153358818
    • AHT 2Q 11am:
    • SHO 2Q 12n:
  • Aug 11:
    • HPT 2Q 1pm:
    • CZR 2Q 430pm: 844.231-441, pw: 55917191
    • STN 2Q 430pm
    • HTHT 2Q 9pm: , pw 7103 4558
  •  Aug 12:
    • HMIN 2Q 9pm: , pw HOME INNS
  • Aug 14:
    • Revel Auction Proceedings

COMPANY NEWS

LVS – in its 10Q, the Company updated its comments regarding Parisian and the construction delay and indicated the Company expects to resume construction

"pending receipt of certain government approvals, which management has been informed are scheduled to issue in October 2014."

Takeaway:  A 4-month delay will make 2015 a difficult target opening date.   

 

034230:KS – Paradise Company Ltd, reported total revenue in the second quarter increased 12.4% year-over-year to KRW172.5 billion based including casino revenue increased 16% year-over-year to KRW148.8 billion and net profit of KRW23.9 billion (US$23.1 million) in the three months to June 30.  The company attributed the stronger growth to increased visitation and play by Chinese high rollers. Chinese VIP players accounted for 66.1% of table drop at Paradise casinos during the second quarter of the year

Takeaway:  Stronger growth than Macau

 

IGT – announced the Company has begun cost-cutting consolidation of manufacturing functions that will include moving at least some operations from Las Vegas to Reno.  The effort is aimed at consolidating some of their manufacturing functions as a viable method to improve operating efficiencies.

Takeaway: Despite the announced merger, it sounds like a restructuring charge is in the near future. 

 

LVS – The Nevada Supreme Court on Thursday upheld a lower court ruling requiring the Las Vegas Sands Corp. to turn over unredacted documents in LVS' continuing legal proceedings with Steve Jacobs, who led the company’s Macau operations until 2010.  Additionally, a new court hearing is scheduled for August 14 at the District Court of Clark County in Nevada, to address an attempt by Mr Jacobs and LVS legal team to get the court to reconsider its earlier dismissal of a defamation claim he also made in March 2011 against Las Vegas Sands chairman Sheldon Adelson as well as against Las Vegas Sands and Sands China.

Takeaway:  Does anyone still care about Jacobs?

  

NCLH (Seatrade Insider)– Pride of America will depart Nawiliwili, Kauai, at 7 p.m. Thursday and spend Friday at sea to avoid Hurricane Iselle.  But as Norwegian Cruise Line closely monitors the rare double hurricane situation in the Pacific, it still anticipates the ship's Aug. 9 embarkation from Honolulu to take place as scheduled.

Takeaway:  Hawaii is having a tough year so far in 2014.  This rare duel hurricane threat will make trends worse.

 

INSIDER TRANSACTIONS

PENN – CFO Saul Reibstein bought 2,500 shares of stock on Monday, August 4th at an average price of $10.16 per share and now owns 10,300 share.

 

LHO – CEO Michael D. Barnello sold 30,000 shares of stock on Monday, August 4th at an average price of $35.57 and now owns 211,331 shares.

INDUSTRY NEWS

California I-gaming - Internet poker will not be legalized in California this year.  Sen. Lou Correa has pulled his bill saying there is not enough time to build consensus before the legislature goes home for the year this month.

Takeaway: No surprise here. 

 

 

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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