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By Rebecca Runkle and Team


“Thus hath the candle singd the moath”  William Shakespeare (Merchant of Venice) 


A sell-side shop upgraded Apple this morning.


Upgrading Apple after it’s doubled in 6 months and is over-bought reminds me of watching moths flutter around a night-time light as a young girl growing up in Colorado.  No one knows for sure why moths do what they do, but there are theories.  My favorite:  these creatures are irresistibly attracted to the bright light (Apple) due to an evolutionary short circuit of sorts (easier to upgrade at $180 than $90).   


Don’t get me wrong, Apple’s a great fundamental story and we are short it not because the franchise is going to hell in a hand-basket tomorrow.  We are short it in the virtual portfolio because it is over-bought, because Keith got his price and because if we did manage money we’d be selling some of our long position up here – not buying more.  Risk management, plain and simple.


Other names we like are MOT and YHOO, but price matters.


See Rebecca Runkle’s portal for more details 




By Tom Tobin and Team


H1N1 has boosted the performance of stocks we included in our Influenza screen.  In the last 2 weeks the trajectory of visits to physician offices has broken out to the upside.  When I went to compare the report for the same week last year, the report is not there because there is not typically a flu season in August to comment on.  Flu spreads when the weather gets cool and humidity drops because those conditions boost its survival out of the body and the chance to spread.  There is a raging flu season already in the US, even before the weather turns cool.  Starting from such a high concentration of flu cases means there are more chances for the virus to spread person to person; think exponential. 


What may be another way to look at flu is absenteeism in the workplace.  If flu gets out of hand, temp staffing will be catching a bid and suffering the same absenteeism which could spell pricing and volume.   While there is not complete overlap with nurse staffing (CCRN AHS and ASGN)  there may be some work to be done there on the long side.  Keith likes the quantitative set up telling me at least two of these stocks “look fantastic.”


AMGN, QGEN and UNH are our favorite names in Healthcare.


See Tom Tobin’s portal for more details 




By Brian McGough and Team


A conversation with Dick’s Sporting Goods management suggested that Under Armour’s launch of running shoes in their stores was inline with plans and overall DKS was pleased with the product. This is particularly noteworthy because the general perception across the marketplace and the Street is that the launch did not live up to expectations. Clearly there were some disappointments. However, with DKS being one of UA’s largest partners we think the vote of confidence bodes well for future product proliferation.


See Brian McGough portal for the call outs of the day …  


UA continues to be our favorite long-term names…

(Swine) Flu Season Already?

At the risk of being alarmist, we are pointing out the following graphics on (Swine) Flu with caution.  In no way is the Research Edge Retail team pretending to be CDC workers or doctors, but we would be foolish to ignore such eye opening trends.  The charts below tell the story, although we can say with certainty the media isn’t shying away from what may become the most talked about national topic in the coming weeks and months.   As evidence as to how consensus the concerns are, do a quick Google News search for “Flu” and you’ll find around 75mm hits, with about 39mm of them related to H1N1 specifically, and about symptoms, prevention, and the effectiveness of wearing surgical masks.


(Swine) Flu Season Already? - flu chart 1.1


We’ll leave it to you to decide if you want to stay home, avoid public places, and use Purell every five minutes.  However, we’re fairly sure if the Flu virus continues to permeate the rest of the U.S with the speed and breadth as we have observed in recent weeks in the South, then there will be implications for consumer spending in both quantity, category and channel.  


(Swine) Flu Season Already? - flu map 1.2


So, how should we think about the potential impact of Swine Flu fear and/or actual symptoms impacting a large portion of the U.S population?  The obvious answer is to think about which retailers may benefit from this pandemic, which include CVS, WAG, and RAD. For those thinking about which companies may suffer most, mall-based retailing could take the biggest hit as consumers look to avoid highly populated public areas.  For the extremists, Amazon.com, Drugstore.com, FedEx, and UPS all could benefit from cocooning.


We don’t have all the answers and we’re not into “playing” names at the expense of human suffering, but this is a trend worth watching.  For now we’re digging to see if any impact is materializing in the South as the brown states have reached “widespread” levels of Flu activity.  And for those who haven’t bookmarked http://www.cdc.gov/flu/ now is a good time.



Eric Levine



I don’t want to be out of consensus just to be out of consensus, but I like SONC.  Following the cash flow has always been a great way to make money in the restaurant sector and I have used ROIIC as a successful metric to see how cash is deployed and to look deeper into the company’s long-term strategy. 


For years SONC had a very enviable business model and to a certain degree, still does.  Complicating the company’s operational issues is the leveraged recap done a few years back, which has handicapped the company during this difficult time.  Given all that management is doing to improve operations, I see SONC as a company closer to seeing a shift on the margin toward better profitability.  Competitive issues are a risk, but it could be reason not to own any restaurant company.    


REFRANCHISING WILL ADD TO RETURNS - At the beginning of fiscal 2009, SONC set out to reduce the percentage of partnership drive-ins from 20% down to 12%- 14% of the total system.  There are two benefits from this (1) a refocus on improving the performance of the remaining partner drive-ins more effectively and (2) it reduces both the operational and financial risk from the business model, improving overall returns.  It will reduce volatility and provide a more consistent earnings stream over time.  At the end of the 3Q09, SONC had already reduced the percentage of partner drive-ins from 20% to about 14%. The 177 stores sold in the third quarter netted $50.0 million in cash, bringing the cash balance to more than $100.0 million at the end of 3Q09.


SLOWING CAPITAL SPENDING WILL ADD TO RETURNS – Between 2004 and 2007, SONC’s capital spending nearly doubled from approximately $57 million to $110 million.  In fiscal 2009, SONC will end up spending about $50.0 million and the company plans to take down that level of spending even further in fiscal 2010 to $30 to $40.0 million.  The increased focus on the current store base and limited spending on new stores will have a positive impact on a number of line items on the P&L, boosting profitability, margins and returns.


IMPROVED PROFITABILITY? – It’s likely that SONC will see improved restaurant level margins in fiscal 2010, which would be encouraging after five reported quarters of rather significant declines.   The underlying assumption for improved margins assumes flat partner drive-in same-store sales, which implies acceleration in sales trends on a 2-year average basis.  Although the company is relying on the full-year benefit of its 2009 refranchising activity and lower commodity costs to drive restaurant level margins higher, we have yet to see a recovery in SONC’s 2-year average partner drive-in comparable sales trends (though they are stabilizing).  And, if the value menu continues to grow as a percent of sales, it will continue to put pressure on average check and food costs as a percent of sales, offsetting some of the YOY commodity cost favorability.   Operating margins should turn positive as early as 4Q09 and stay positive in fiscal 2010 even if restaurant margins remain somewhat under pressure.




There is much more to the SONC story, but clearly management is doing everything within its control to set the company down a better path.  Over time the path will reward shareholders, but in the short run the MACRO environment continues to be very challenging for every restaurant operator.  On the positive side, MCD’s same-store sales growth has slowed and traffic has turned negative, which implies that MCD is not taking market share anymore.  The downside risk associated with MCD’s slowing sales trends is that MCD will push harder to drive traffic, leading to an increased level of discounting from the company.


As a point of comparison I have included the same ROIIC calculation for JACK.



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The MGM lion is roaring. Is it justified?  If I were management I’d issue a serious amount of stock and solve the balance sheet issues in one fell swoop.


The stock is up 72% in September alone.  Thankfully, we haven’t been negative on the name but we weren’t pushing it as a long either.  Shame on us.   So is it time to take a stand?


A weak upgrade yesterday helped push the stock up another 7% and pushed me over the edge.  I won’t dwell too much on the upgrade but 11x $1.5bn in 2010 in EBITDA gets me to about $8 per share, not $18.  I’ve covered this industry a long time and an 11x multiple for mostly LV assets is about 2 turns higher than the average multiple over the last 10-15 years, and that’s for companies that were leveraged on average 4-5x, not 8x.  I guess an 11x multiple makes sense if one assumes a sharp V-shaped recovery.  The days of cost of borrowing being 3%, 20%+ annual increases in home prices, and negative savings rates are long gone.  MGM won’t be approaching its peak EBITDA of $2.4bn in EBITDA for many, many years and there won’t be a v-shaped recovery.  Oh and I think $1.5bn in 2010 EBITDA is too high.


We were in Las Vegas this past week and it’s clear that business has picked up.  However, the improvement stems from:  1) seasonality and 2) easier comparisons.  Neither of these provides much comfort that the underlying metrics are improving.  Vegas seems to be bouncing along the bottom.  I would argue that we are not even in recovery mode, never mind a V-shaped recovery as implied by MGM’s valuation.


CityCenter is obviously a big potential catalyst, positive or negative.  We toured the construction site and I must admit that I was impressed.  The big issue is whether or not CityCenter can grow the market.  Does it have enough “special sauce” to drive visitation to the city to offset the huge capacity increase.  We calculate CityCenter’s 6k rooms will raise high end Strip room supply by over 30%.  Even if CityCenter does okay, cannibalization of MGM’s existing 32k Strip rooms is the big issue.  See our 07/17/2009 note, “PLENTY OF ROOMS AVAILABLE AT THE STRIP INN IN 2010”.


                                               MGM: TIME FOR AN EQUITY DEAL? - LV high end room inventory


It’s all about room rates and maybe that’s why we are negative on Las Vegas next year and skeptical of a v-shaped recovery.  We’ve written extensively on our view that Las Vegas was an exaggerated microcosm of the consumer bubble.  National housing prices was statistically the most significant economic driver of Strip room rates over the last 15 years and drove almost all of the huge margin expansion experienced over that time period (see our updated Strip margin analysis, “FRAT BOYS AND LAS VEGAS”  from 06/01/09).  With housing plummeting, the savings rate climbing, and gaming’s share of the discretionary wallet declining, we are hard-pressed to believe that:  a) a V-shaped recovery is forthcoming and b) room rates will approach their 2007/2008 peak any time soon.


                                                MGM: TIME FOR AN EQUITY DEAL? - LV PROFIT MARGINS


The new Las Vegas is looking awfully similar to the old Las Vegas:  low room rates keeping the gaming floor full.  This model works, just not as well as the one that focused on 20%+ annual room rate increases.


With this thesis in mind, I would be issuing equity, straight or a convertible note.  MGM is not out of the woods from a balance sheet perspective.  As of 6/30/09, MGM was levered almost 8x.  That’s high by any measure.  Why not take the leverage risk off the table? 



SEPTEMBER 18, 2009





  • A conversation with Dick’s Sporting Goods management suggested that Under Armour’s launch of running shoes in their stores was inline with plans and overall DKS was pleased with the product. This is particularly noteworthy because the general perception across the marketplace and the Street is that the launch did not live up to expectations. Clearly there were some disappointments. However, with DKS being one of UA’s largest partners we think the vote of confidence bodes well for future product proliferation.


  • With the back to school chatter officially dwindling, we can’t ignore the trend of consumers buying closer to need. Footwear sales posted a substantial increase last week, increasing by 17%. The measurable improvement  in sales takes the trailing 3 week performance to only down 1.8%, the best performance we have seen for the category since late April. ASP’s while still positive at 1.2%, decelerated from 4.9% in the prior week. This was the first deceleration in ASP growth in seven weeks. While most brands posted a strong week of growth, Reebok, Adidas, and New Balance all showed sales declines.  Converse and Under Armour were top performers for the week, with increases of 59% and 53% respectively.


  • A visit to a Dick’s Sporting Goods store revealed prime product placement for K-Swiss’ recently launched running shoes. The $75 “Tubes Run 100” were prominently positioned with a brand specific display on an end-cap located near the center-core of the footwear department. While this shoe represents the entry level product in KSWS’ recently launched performance running line, we’re encouraged to see the “classics” image being complimented by the new “performance” offering. The running line currently ranges for $75 to $125 at retail.


  • At an investor conference yesterday, Kenneth Cole management expressed the company is embracing the trade-down environment from luxury to lower priced shoes.  Admittedly, the brand lost on the way up when the consumer migrated above KCP’s price range. Now, with luck and a changed macro backdrop the company believes they are poised to take advantage of the consumer trade down.  I guess if you wait long enough, eventually the market dynamics will revert back into favor.


  • Timberland increased the discounts on its own e-commerce site for the beginning of September from 30% last year to 40% this year.  In looking at NPD data, sales across all channels for the brand have been deteriorating at a rapid pace. Over the last three months June sales declined by 11.7%, July by 13.5%, and August by 20%. Interestingly as sales momentum has deteriorated, ASPs have increased from flat in June to up 14% in August.  While increased ASP’s may suggest an attempt to preserve margins, the heavy discounting is likely an attempt to clear inventory as we near the key boot selling season. With the departure of two high level executives (CFO and co-President) recently, the direction of the brand and strategy still appears to be unclear.


  • As Pier 1 continues its turnaround efforts, the company has successfully negotiated rent reductions on 30% of its store base. These reductions which will reduce rental expense by $37 million with 75% of the cash savings expected to flow through over the next 3 years. PIR remains one of the most aggressive retailers on the rental reduction effort. On the sales front, the company indicated that same store sales have turned positive in September.





-Positive trends are beginning to emerge in specialty retail mergers and acquisitions activity - A report by investment banking firm Tully & Holland cites a rebound in retail valuations and a more than 50% rise in the S&P Retail Index since March as key elements in the shift. A dozen transactions were announced in the second quarter of this year, double the volume during the first quarter and at about the same level as the second quarter last year, the study said. About two-thirds of the activity this year has involved distressed sales, and most acquirers were strategic buyers. Transactions in the second quarter include: New Deal buying Against All Odds; Levi Strauss & Co. acquiring Levi’s Docker’s outlets; Golden Gate Capital getting J. Jill Group Inc.; Jimmy Khezrie purchasing Man Alive; Syms Inc. buying Filene’s Basement and Dress Barn acquiring Tween Brands Inc. Third-quarter activity includes: Amazon.com purchasing Zappos.com; a consortium led by Diamond Capital buying 16-door general merchandise retailer Baskins Department Stores; Golden Gate Capital acquiring Eddie Bauer Holdings Inc.; Tresalia Capital’s taking a minority stake in Tory Burch and Advent International getting Charlotte Russe Holding Inc. The study cited two other positive signs in August: the initial public offering filing by Dollar General Corp., owned by private equity firm KKR, and the receipt of $11 million in private placement funding by online apparel retailer MyShape. Tully & Holland noted valuations for three recent transactions were within historical retail valuation norms: Tween Brands Inc. sold at 5.6 times earnings before interest, taxes, depreciation and amortization; Eddie Bauer at 5.9 times EBITDA and Charlotte Russe at 6.6 times EBITDA. <wwd.com/business-news>


-Department stores are continuing to struggle as Japan inches its way out of a recession - Department store sales in August dropped 8.8%. This is the 18th straight month of decline for the retailers, which have been suffering for about a decade in the wake of increased competition from shopping malls and specialty stores. Apparel sales at Japan's 271 department stores fell 11.3% during the month.  Men’s wear sales shed 11.7%, while women’s wear sales declined 11.4% against a year ago.  The country's harsh economic condition, coupled with an unusually cool summer bit into business,  the association said. <wwd.com/business-news>


-K-Swiss Racing for Success in the Long Run - While Under Armour received overwhelming attention from the media and Wall Street for its running shoe “launch” this past year, another iconic athletic brand is making inroads into the running shoe market while flying under the screen. The primary difference in the way the two brands entered the running has to do with the slow, measured approach taken by K-Swiss Chief Executive Steven Nichols as he works to build on a performance platform for future growth. <sportsonesource.com>


-Hanesbrands Inc. said Thursday that it will exit the yarn business by selling three of its plants and closing a fourth - The Winston-Salem, N.C.-based basics maker said it will stop production immediately at its yarn facility in Sanford, N.C., which has 150 employees. In addition, by yearend Hanesbrands will close two warehouses in North Carolina that have a total of 25 employees. Gastonia, N.C.-based yarn manufacturer Parkdale will take over Hanesbrands’ yarn plants in Rabun Gap, Ga., Mountain City, Tenn., and Galax, Va. Those facilities have a combined head count of 780 employees, the company said. Hanesbrands declined to disclose the sale price. The firm said it will use Parkdale as a yarn supplier after the deal is completed. “Producing our own yarn, when more than adequate large-scale supplies exist, serves no strategic purpose,” said Richard Noll, Hanesbrands chairman and chief executive officer. “Outsourcing yarn is a logical evolutionary step to drive value and improve the use of our assets.” The company said it expects to realize $100 million in balance sheet benefits within six months of the sale due to working capital improvement and reductions in raw material requirements and inventory. It anticipates the sale to close in the fourth quarter of its fiscal 2009. <wwd.com/business-news>


-Diadora's sale of the founder of footwear firm Geox SpA has been put on hold until next month by an Italian bankruptcy court - As reported, the Italian-based Diadora SpA in June agreed to to sell its business to Geox SpA's founder and chairman Mario Moretti Polegato through his family's investment arm.  <sportsonesource.com>


-Adidas and Puma are gearing up for what they're calling “a historic handshake" in support of a non-violence initiative - On Monday, dubbed Peace One Day 2009, employees from the two German firms will play football together and then watch “The Day After Peace,” a film by Peace One Day's initiator, Jeremy Gilly. This will be the first time the two Herzogenaurach-based companies have been involved in a joint activity since their founders Rudolf and Adi Dassler left their shared sport shoe firm and established Adidas and Puma 60 years ago. The goal, both companies say, is to raise awareness for Peace One Day, a project initiated by Gilly in 2001 to establish an annual day of ceasefire and non-violence. Adidas and Puma said they would also bring the message of peaceful cohabitation to Munich and Stuttgart's football stadiums on Saturday during the halftime of the German premier league games being played there. As Adidas chief executive Herbert Hainer proclaimed, “We firmly believe that sport can bring the world together.”  <wwd.com/footwear-news>


-Labelux Group, a Vienna-based luxury goods holding company, has acquired a stake in high-end Italian accessories maker Zagliani - Though the terms of the deal were not disclosed, Berndt Hauptkorn, chief executive officer of Labelux, said the investment is in line with the company’s “buy to build” strategy. “We continue to believe that the luxury goods market will remain on a long-term growth trajectory for those brands and designers who manage to occupy a unique territory and deliver on design, quality and craftsmanship,” he said. Mauro Orietti-Carella, Zagliani’s owner and creative director since 2002, said the new setup will allow Zagliani to reach its potential and support long term growth. “We chose Labelux because we share a philosophy of uncompromised quality in every aspect of the brand,” he said. “We have always believed that brands with strong integrity and focused DNA will continue to have a future in today and tomorrow’s luxury market.” <wwd.com/business-news>


-Italy’s Sixty SpA has signed an agreement with Aldo Group to oversee its retail division in the U.S - “They’ve hired us to run their stores in the U.S. as their retail store portfolio managers,” said David Bensaboun, a vice president at the Montreal-based footwear and accessories firm. The move will reduce infrastructure and operations expenses for Sixty, a premium denim and contemporary sportswear maker. Word of job reductions at the New York headquarters has been circulating this week among employees of Sixty USA, and some of them already have begun sending out résumés. However, management has not made any announcements about operational changes to the U.S. business. A spokeswoman for Sixty USA, which distributes the Miss Sixty, Energie, Sixty, Killah, RefrigiWear and Murphy & Nye labels, declined to comment. <wwd.com/business-news>


-E-bay takes brand fight to EU - E-bay has taken a petition signed by 750,000 of its users to the European Union to ask it to amend EU competition law to stop brands from restricting the sale of their products on the internet. <drapersonline.com>


-NFL Apparel lawsuit Needles the unions - As American Needle, Inc. files papers with the Supreme Court Friday in its dispute with the NFL over licensed apparel, the sports unions remain hopeful that any ruling in the case is as narrow as possible. American Needle sued the NFL after the league's exclusive apparel deal with Reebok barred it from selling clothes with NFL logos, and the sports unions fear that the court may issue a ruling that provides antitrust exemption for the leagues that goes beyond licensing and marketing. <online.wsj.com>


-Target is ready to walk on the wild side with Jean Paul Gaultier - Sources told WWD that Gaultier is next up in the discounter’s Designer Collaboration series, a relatively new concept geared to bolster the chain’s cheap-chic status. A Gaultier collection wouldn’t appear in the stores for some time, but Target, said sources, has the ball in motion. “We don’t have anything to share other than we admire his work and incredible design aesthetic,” a Target spokesman said Thursday. A spokeswoman for Gaultier declined comment. Target’s DC series entails recruiting established designers with strong reputations to create collections based on their muses or other creative inspirations. The series made its debut with Alexander McQueen in March with McQ Alexander McQueen for Target, inspired by Leila Moss, lead singer of The Duke Spirit. Anna Sui followed this month by channeling the TV program “Gossip Girl.” She’s a fan of the show. The collections were rolled out to hundreds of Target stores and also are sold on target.com and stay available for four months or so.  <wwd.com/retail-news>


-Sears recruits merchants to sell on Sears.com - Not to be outdone by Walmart.com, Sears Holdings is expanding its online marketplace to attract more merchants that want to sell their merchandise on Sears.com. <internetretailer.com>


-Timberland Co. last week hired Carrie Teffner as its new CFO, effective Sept. 28 - Teffner, 43, comes from Sara Lee Corp., where she served in executive financial positions since 1998, including SVP and CFO of the international household and body care division, and SVP and CFO of the foodservice division. Crimmins joined the Stratham, N.H.-based company in 2002 and served as its CFO since March 2007. He will depart on Sept. 30. <wwd.com/business-news>


-The Consumer Product Safety Commission recalled approximately 2,000 pairs of Clarks children’s shoes on Thursday - The shoes were manufactured by C&J Clark America Inc., which does business as the Clarks Companies N.A. According to the agency, there is a risk that molded rubber pieces on the sole of the shoe could detach, posing a risk of choking to infants and young children. The shoes were sold at Clarks stores nationwide for between $35 and $40 beginning in February 2009 and ending in July 2009. The recall covers shoes sold in infant sizes under the “crawlers” style name and children’s sizes under the “hazy daze” style name. <wwd.com/business-news>


-MBT appoints CEO - Nearly a year after naming Ken Pucker as interim global CEO, MBT has made a permanent hire for the top spot. The Swiss footwear company this week named Jan Stig Andersen, an ex-Ecco CEO, as its new chief executive. He will officially join the company next month, when Pucker departs. <wwd.com/business-news>


-The Real Housewives announces an apparel line - Television merchandising juggernaut Bravo Media, which has already moved into the apparel and accessories business with high-end handbags ("NYC Prep") and designer clothes ("The Fashion Show") -- which the Image section discussed in this article on the future of fashion on TV -- is set to announce its latest apparel adventure later today: a line of clothing and accessories inspired by the fashion and style of "The Real Housewives" reality franchise. Bravo has struck a licensing deal with a company called Royal Plush to develop a co-branded the Real Housewives-Royal Plush line, which will consist of premium denim, loungewear, activewear, handbags and accessories. Bravo is also expected to announce the start of production on the third season of  "The Real Housewives of New York City," with Countess LuAnn de Lesseps, Bethenny Frankel, Kelly Killoren Bensimon, Alex McCord, Ramona Singer and Jill Zarin (a few of whom have been spotted at New York Fashion Week, which wraps up here today).  <latimesblogs.latimes.com>




RESEARCH EDGE PORTFOLIO: (Comments by Keith McCullough): KSWS


09/17/2009 10:57 AM


Dogs that are illiquid? Not what the risk manager wants me to be owning with the market up here. Sorry Brian; I'm out... for now... KM




GALAXY LOSES TWO STARS destination-macau.com

Ciaran Carruthers is moving on from his role as StarWorld COO.  The timing of Carruthers’ departure is not believed to have anything to do with Galaxy’s results announcement this week.  DM speculates that the company, guided by the Lui family, is looking to go in a different direction than it had been under Carruthers’ leadership: a more “Vegas-like” direction.  Mike Mecca, a very experienced industry veteran, has been brought in as President/COO and will likely change the corporate culture. 


Some issues confront Mecca almost immediately, such as how to keep the company running smoothly in the absence of Carruthers and the former VP of StarWorld’s casino operations Justin Casey, who also recently ended his time at StarWorld.  Where Mecca will really play a valuable role is in the capital markets; Galaxy needs go to the capital markets in order to fund its Cotai project, according to DM.



CAN SJM BREAK 3BN? destination-macau.com

SJM has been doing well in September, according to DM. Having seen numbers for the first 13 days of the month, DM writes that SJM’s hold percentages seem to have turned around after two weak months. This turnaround has resulted in a gross gaming revenue figure of MOP1.46 billion for the first 13 days – more than MOP100 million per day.  This news comes following the first-half results this week which reported a profit of HK$338 million from HK$571 million in 1H08.  There is still no reliable news on Stanley Ho’s current condition.




SHUN TAK GETS READY TO POUNCE destination-macau.com

Pansy Ho’s Shun Tak Holdings announced this week that its net profit before exceptional gains was up 43% compared to the first half of 2008.  Shun Tak also announced it is raising HK$1.4 billion in convertible debt. The company states that it “will be used for general working capital and to finance new investment opportunities”.  DM speculates that the company may look at buying a bigger stake in STDM.





The declaration of Hengqin island as China’s third state-level strategic development zone should be sufficient to convince skeptics that Zhuhai’s time has finally come.  This is good news for Cotai; while infrastructure development is needed on Hengqin, the Chinese will certainly satisfy that need rapidly.  Hengqin’s population is likely to rocket to more than 120,000 by 2015, from just a few thousand at present.  The Lotus Bridge will have a feeder network and will probably go to the same operating hours as Gongbei.




WYNN MACAU CLEARED FOR IPO destination-macau.com


Following their IPO gaining approval from the Hong Kong stock exchange, Wynn Resorts is under the spotlight in Macau these days.  The Wynn Macau had 8.9% of the table games in Macau but captured 15.4% of the table revenues during the first six months of the year.  The statistics are even more dramatic in slot machines, where the Wynn Macau had 9.7% of the machines, but 23.9% of the revenues. 


The company hasn’t indicated what it plans to do with capital raised from its IPO.  There are tentative plans to develop a 21 hectare site on Cotai but no construction timeline has been outlined.  The company expects strong demand for its offering.  Wynn is hiring 1,000 new staff in Macau for its US$650 million Encore project, which is funded and due to open next spring.