Another Macau company reports a disappointing quarter. Stock buyback announcement a positive but not enough.




  • 2Q Luck-adjusted property EBITDA:  $345m 
    • CoD:  +$20m, brings margins to 31%
    • Altira: +$10m, brings margins to 13-13.5%
  • Expanded market share in mass segments in 2Q
  • Started large development (luxury precinct) on CoD; will be ready in 2016
  • MSC:  will open in mid-2015; will top off the hotel in September
  • CoD Manila:  will open later in 2014
  • Approved $500m stock repurchase program and will be able to pay out special dividends
  • 2Q EBITDA margin:  26.4%
  • CoD:  Unfavorable revenue mix btw revenue and rc sharing programs. 
  • EBITDA margin impacted by $10m due to wage increases
  • Additional labor expense in $10m in 3Q and 4Q 2014
  • Draw down studio city term loan in July
  • 3Q guidance:  D&A: $95-100m; corp expense: $30m; consolidated net interest expense: $35m ($10m CoD Manila, $24m cap interest)


Q & A

  • 2Q CoD:  low hold and negative VIP mix.  Utility/maintenance fees of $5m that was not capitalized.
  • Mass slowdown:  mass has held up relatively well; but perfect storm coming - harder comps
  • Feel better about August - early August compared with early July, there is definitely an uptick - Hedgeye notes that August is a seasonally stronger month than July
  • Blames July performance on World Cup
  • No issues on filling up their rooms
  • Premium mass:  healthy business
  • Volumes:  not overly promotional but operate in highly competitive environment.  
  • $500m stock buyback:  similar to how US companies have operated this type of program
  • Investigation: Taiwan branch indicted for banking/foreign related offenses. Will defend vigorously.
  • MSC:  have received construction permits.  Do not need any other construction permits.  Firing at full speed.
  • MSC tables:  will get fair share, may find out table count 9 months ahead of opening; can accomodate 500 tables

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more