LEISURE LETTER (02/06/2015)

TICKERS: SGMS, RCL

 

EVENTS

  • Feb 10: 
    • IGT extraordinary shareholder meeting vote
    • HOT 4Q CC 10:30am
      • (1866) ; pw: 67514695
  • Feb 12: 
    • MPEL 4Q CC 8:30am
      • (1866) ; pw: MPEL
    • PNK 4Q CC 10:00am
      • ; pw: 68847867
    • BYD 4Q CC 5:00pm
      • ; pw: 5378350
  • Feb 17: MGM 4Q CC 11:00am
    • ; pw: 8870181
  • Feb 18: 
    • HYATT 4Q CC 11:30am
      • ; PW: 62845475
    • MAR 4Q release 5pm
  • Feb 19:
    • HST 4Q CC 9:00am
  • Feb 25: Prestige analyst day (9:00am-12pm)

HEADLINE STORY 

China  Hua Jingfeng, a deputy bureau chief at the Ministry of Public Security, said illegal gambling remained a problem even though the government was "forcefully keeping it in check". "Some foreign countries see our nation as an enormous market, and we have investigated a series of cases," Hua told reporters.

 

"A fair number of neighboring countries have casinos, and they have set up offices in China to attract and drum up interest from Chinese citizens to go abroad and gamble. This will also be an area that we will crack down on."

 

Casinos are not allowed to legally advertise in mainland China, but operators have skirted around the issue by promoting the resorts where the casinos are located.  Hua said the government was also seeking to crack down on a "small number" of police and government officials who are guilty of collusion in covering up gambling and providing an umbrella of protection for it.

Article HERE

Takeaway:  Manila, South Korea, Cambodia, etc. might not get the big boost expected from incoming Chinese gamblers 

COMPANY NEWS

Novomatic- The gaming equipment supplier says that according to preliminary data, revenue for 2014 generated by its three holding companies totaled EUR3.8 billion (US$4.4 billion), +8% YoY.  

 

The firm said in a statement: “During the financial year 2014, the group‘s continued growth was based on the intensification of activities in the European core markets such as the U.K., Spain, Italy and also Holland, where through acquisitions the company has achieved a position as market leader.

Article HERE

 

SGMS - As part of its association with global gambling operator bwin.party, Scientific Games has initiated the distribution of a selected group of its online slots to the residents of New Jersey. From February 2015, the registered players of Borgata Casino and the New Jersey arm of PartyPoker will have access to SG video slots.

Article HERE

 

RCL - arranged financing for its fourth Oasis-class ship at STX France, which cut steel for the newbuild this week. The unsecured term loan is for an amount up to the US dollar equivalent of approximately €931m. The financing is fully guaranteed by France's export credit agency, Compagnie Française D’Assurance pour le Commerce Extérieur. The 12-year loan, to be assigned to Royal Caribbean once the ship is delivered in the second quarter of 2018, will amortize semi-annually. At the company's election, interest will accrue at a fixed rate of 3.72% or at a floating rate equal to LIBOR plus 1.1%. 

Article HERE

 

 

INDUSTRY NEWs

 

Japan – Japan’s government has tapped Innovation Group to aid in the study as part of a team of industry advisors led by Deloitte Touche Tohmatsu.

The research will include advice for implementing gaming regulations, practices from similar jurisdictions, background on problem gaming programs, anti-money laundering approaches and the financial impacts from competing jurisdictions.

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.


7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more