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May 15, 2015

May 15, 2015 - Slide1

 

BULLISH TRENDS

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BEARISH TRENDS

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MACAU LEGEND 1Q 2015 CONF CALL NOTES

Takeaway: Mass promotional pressures are intensifying on the Peninsula. Chairman David Chow thinks Galaxy/MSC will each get 150 additional tables.

CONF CALL

  • Negatively impacted across all 3 segments: VIP, premium mass and mass
    • No indication on when they will improve. Maybe no improvement until end of 2016.
  • New supply will add pressure on margins.
  • Junkets at Landmark are well capitalized
  • Will continue to expand self-run business at New Legend
  • Mass market:  more competition in rebates on the Peninsula
  • Do not expect to have any labor issues with construction of new projects
  • Harbourview hotel: 389 rooms (59 suites)
    • Only 50% rooms open in 1Q. Now all rooms open.
    • 80% occupancy in weekends/holidays - all rooms at non-comp
    • F&B trending nicely
  • Legend Palace Hotel: Waiting for construction license...expect hotel to be completed 2Q 2016
  • Legendale Hotel: 500 rooms, expect to be completed by end of 2017
  • Increased marketing/promotional costs for New Legend/Babylon which hurt margins in 1Q 2015.
  • Expect more business to come at Babylon (moved 20 VIP tables there but not in play yet as they need to hire people)
  • Want to grow direct VIP business

 

Q & A

  • David Chow:  300 table quota for 2015.  CoD and Galaxy Phase II may get 150 tables each.  Macau Legend asking for some tables too. Macau government want visitor diversification, less reliance on China. 
    • Cap on Mainland tourists? China government do not want to control people or markets. China govt will give more money to SMEs and the stock market. 
  • New revenues in 1Q:  HK$29m contribution from New Legend, HK$14m contribution from Harbourview hotel
  • One junket closure (worked exclusively at Macau Legend) (150 staff moved to Babylon): negative impact of HK$10m in 1Q. One-off expense in Harbourview hotel opening in 1Q.
  • Expect more tables will be available for the Babylon casino
  • Revisiting corporate costs in the business. Tightening their costs.
  • No change in capex targets for the hotel projects


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All Markets Have Illiquidity, Not Just Treasuries

 

In this excerpt from today's edition of RTA Live, Hedgeye CEO Keith McCullough responds to Jim Rickards’ commentary on illiquidity in U.S. Treasuries and reminds subscribers that there are liquidity issues in stocks, too.

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McCullough: Here’s The Biggest Takeaway From My Conversations With Top Money Managers This Week

 

In this brief excerpt from The Macro Show, Hedgeye CEO Keith McCullough discusses what he heard during three days of meetings with top institutional investors in Chicago, New York, and Boston.


SINGAPORE Q1 2015 REVIEW

Takeaway: VIP distress

CALL TO ACTION

Overall, the gaming environment in Singapore remains challenging, particularly in the VIP segment. While MBS held up due in part to high hold, Q1 2015 was another bad quarter for Genting Singapore. Its RWS property lost market share in every gaming category. With no obvious catalysts for growth, Genting Singapore shareholders can only hope for value enhancing corporate activity. Periodic share repurchases are not enough.

 

Please see our detailed note:  

http://docs.hedgeye.com/SING_1Q_2015.pdf


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