LEISURE LETTER (01/13/2015)

TICKERS: LVS, GTECH

COMPANY NEWS

LVS Cheung Che Kin, a businessman from Hong Kong, has sued Marina Bay Sands (MBS), claiming that he suffered loss and damage when he was not allowed to take over a baccarat game from a combined pool of chips he shared with a friend at MBS.  MBS denies that Mr Cheung has suffered loss and damage and has filed a counter-claim for an outstanding credit amount of $1.96 million, plus 12 per cent interest, from Mr Cheung. No date has been set for the trial yet.

Article HERE

Takeaway:  More credit headaches to deal with for MBS

 

GTECH – Ontario State’s newly launched GTECH Interactive powered online gambling portal PlayOLG.ca has faced several issues since its launch on Friday 9 January, which has left many Ontario online gambling consumers frustrated. Ontario consumers took to social media channels to report website issues regarding game loading times, onsite glitches and flawed geolocation access services which would not allow some customers to register with gambling portal.

Article HERE

 

Amaya Gaming is evaluating non-binding proposals from certain persons for its B2B land-based gaming solutions business, Cadillac Jack Inc

Takeaway:  Amaya acquired Cadillac Jack in Oct 2012 and has been thinking of strategic alternatives for that business since Oct 2014. 

 

Chinese Strategic Holdings Limited – has been in negotiations with a Macau Nasdaq-listed company involving a proposed casino on Tinian Island in the Northern Marianas.  Steps include 1) assistance in the possible application for a gaming license of and for the new hotel complex; (2) facilitation of gaming license applications through its experience, professional knowledge, and understanding it gained through global licensing applications; (3) rendering of consultancy services relating to negotiations between the government and regulatory agencies in the CNMI; and (4) providing advice and enabling TRI to fulfill and satisfy compliance and/or regulatory duties and responsibilities and comply with licensing conditions and requirements imposed by the CNMI government.

 

The plan, according to Townland Consultants, includes two world-class golf courses, 20-30 6-star high-end villa s, mid/high-end 4-5 Star hotel with 300-400 rooms, a retail / dining village, an agricultural cultivation zone which will provide quality food for the hotels on the island, among other attractions.

Article HERE 

INDUSTRY NEWS

Junkets –  Recently, there has been more lower quality VIP players, meaning gamblers that bet less money and pay their debts much later – with some not paying at all. There is also data that seems to suggest that credit flow and junket revenues are diverging with the latter significantly underperforming the former.

Article HERE

Takeaway:  We dismiss any analysis trying to compare trends in country credit flow vs a specific segment of a localized gaming industry over a short period of time

 

Alan Ho arrested – Hotel Lisboa’s executive director Alan Ho (a longtime senior executive at SJM and the nephew of SJM founder and Macau gambling mogul Stanley Ho) was sent in handcuffs to the Public Prosecutions Office Monday morning along with five associate suspects, for running a multi-million-pataca prostitution ring that was based at the hotel.

Article HERE

Takeaway:  It seems nobody is off limits - not even a member of the Ho family.

 

China lotteries – country's main lottery, the Welfare Lottery, achieved officially confirmed sales of 205.96 billion yuan ($33.6 billion) in 2014, up 16.67% YoY 

Article HERE

Takeaway: Positive for SGMS

 

Singapore visitation – Nov 2014 visitation fell 3.6%, the 9th consecutive monthly decline.  Mainland China was the lone bright spot, rising 10% YoY in Nov - its 2nd consecutive monthly gain off of a very low comp.  Indonesia and Malaysia visitation remain weak, falling -8% and -19%, respectively in November.

 

Meanwhile, Singapore's Changi Airport Group reported passenger traffic declined 1% in November.

 

LEISURE LETTER (01/13/2015) - s1

 

LEISURE LETTER (01/13/2015) - 2

 

Takeaway:  Given the number of airline incidents and tighter regulations recently, it's no surprise that S'pore visitation has declined in 2014. This could affect mass revenues in Q4.

MACRO

Hedgeye Macro Team remains negative Europe, their bottom-up, qualitative analysis (Growth/Inflation/Policy framework) indicates that the Eurozone is setting up to enter the ugly Quad4 in Q4 (equating to growth decelerates and inflation decelerates) = Europe Slowing.

Takeaway:  European pricing has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely in 2015. 


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

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