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MACAU JUNE CONF CALL: FRIDAY AT 1PM

Takeaway: Research Topic: Who has the most to lose in an increasingly imbalanced supply demand environment over the next two years?

We will host a conference call on Friday, June 4 at 1PM ET to discuss the latest Macau data, our outlook on the market and the stocks and the presentation of a new, original research topic.

 

 

RELEVANT TICKERS INCLUDE:

LVS, WYNN, MGM, MPEL, 0027.HK, 1128.HK, 1928.HK, 2282.HK, 6883.HK, and 0880.HK.

 

 

DISCUSSION POINTS

  • Details behind May GGR 
  • Discussion of base mass trends
  • The impact of Mass re-classifications
  • Revised 2015 monthly market projections
  • Hedgeye company EBITDA estimates vs the Street (LVS, WYNN, MGM, MPEL, and Galaxy Entertainment) 
  • Who has the most to lose in the increasingly imbalanced supply demand environment over the next two years? 

 

CALL DETAILS

Attendance on this call is limited. Ping  for more information.

 


June 4, 2015

June 4, 2015 - Slide1

 

BULLISH TRENDS

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BEARISH TRENDS

June 4, 2015 - Slide7

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June 4, 2015 - Slide12


EVENT: YELP SHORT Best Idea Update Call (TODAY)

Takeaway: Join us on TODAY, June 4th at 1:00pm EDT as we update our bearish thesis and assess the M&A landscape.

EVENT: YELP SHORT Best Idea Update Call (TODAY) - YELP   invite 2

We will be hosting an update call to our SHORT Yelp (YELP) Best Idea.  YELP's business model is unsustainable, and is already breaking down.  Further, a new major red flag has emerged, which we believe is what prompted YELP to shop itself.  However, we don’t believe YELP will find a buyer.

    

Join us on TODAY, June 4th at 1:00pm EDT as we update our bearish thesis and why we see an additional 35%+ downside from here.

 

 

KEY TOPICS WILL INCLUDE  

  • Extreme Attrition Rate: Overwhelming majority of customers are churning off annually.
  • Insufficient TAM: YP.com is not the low-hanging fruit, it's a pipe dream.
  • New Major Red Flag: The story is going to turn much sooner, and get much uglier, than we initially expected
  • Is There a Buyer? Assessing the M&A landscape in terms of both ability and willingness of potential suitors

 

CALL DETAILS

  • US Toll Free:
  • US Toll:
  • Confirmation Number: 39913335
  • Materials: CLICK HERE

 


 

Hesham Shaaban, CFA

@HedgeyeInternet 

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.64%
  • SHORT SIGNALS 78.57%

REPLAY | Avian Flu Thought Leader Call with Dr. Thomas Elam

Takeaway: 45 million birds have been lost to date

Thank you for those you were able to make the call today.  We wanted to provide those who did not have a chance to tune in, to listen to what we learned about the Avian Flu today. Please click on links at the bottom of the page to listen or view the presentation.

 

Key Takeaways:

  • This flu is not giving up easily, we need to see a week or two of no new reports to be confident we are near the end.
  • To-date producers have lost 25% of breaker egg supply.
  • New record high prices are being set for turkey meat and eggs.
  • Could take as long as 12-24 months for industry to return to normal.

 

Audio Replay: Click Here

 

Presentation: Click Here


REPLAY | Avian Flu Thought Leader Call with Dr. Thomas Elam

Takeaway: 45 million birds have been lost to date

Thank you for those you were able to make the call today.  We wanted to provide those who did not have a chance to tune in, to listen to what we learned about the Avian Flu today. Please click on links at the bottom of the page to listen or view the presentation.

 

Key Takeaways:

  • This flu is not giving up easily, we need to see a week or two of no new reports to be confident we are near the end.
  • To-date producers have lost 25% of breaker egg supply.
  • New record high prices are being set for turkey meat and eggs.
  • Could take as long as 12-24 months for industry to return to normal.

 

Audio Replay: Click Here

 

Presentation: Click Here


WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN

We are removing WEN from the Hedgeye Restaurants favorites list as a LONG and moving it down to the LONG Bench.  WEN is up 30% year-to-date and 42% over the past 12-months.  The WEN transformation is more than 50% complete and the stock reflects most of good news.  To that point, over the past two years, the EV/NTM EBITDA multiple has expanded from 9.15x to 13.71x, with the stock now trading at the upper end of its peer group valuation. 

 

WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN   - Chart 1

 

Our bullish bias to WEN is based on the company’s willingness to transform the business model to a leaner, more efficient machine.  The news today is a further affirmation that this process is nearly complete.  As a whole, Wendy’s new operating model will deliver more predictable earnings growth, higher EBITDA margins, and higher earnings quality, while requiring less capital outlay.  By 2017, WEN will have completed the system optimization initiative, where the company will be generating 80% of its earnings stream from predictable, sustainable, rental and royalty income.  

 

All of this is now baked into the company’s valuation. 

 

WHAT’S NEW TODAY

  • The Board authorized a new share repurchase program for up to $1.4B of the company's common stock (30% of the company's market capitalization through the end of 2016)
  • The company intends to repurchase shares with existing cash on its balance sheet, cash flow from operations, net proceeds of $925MM from its recently completed securitization refinancing, expected after tax proceeds of $350MM from the third phase of its system optimization program and the after-tax proceeds of $50MM from the sale of its bakery operations
  • As part of the new authorization, the company will commence an $850MM share repurchase program today, including a modified "Dutch Auction" tender offer to repurchase up to $639MM of its common stock at a price range between $11.05 and $12.25 per share
  • The tender offer is part of an $850MM stock buyback program, which also includes a separate purchase of up to $211MM of the company's common stock from the Trian Group
  • The company expects to use the remaining $550MM of its $1.4B share repurchase authorization before the end of 2016, as funds become available from the company's system optimization initiative

 

2015 OUTLOOK 

  • The company reaffirmed that its business trends remain on track to achieve the 2015 outlook issued in its first-quarter earnings release on 6-May
  • WEN now expects 2015 Adjusted EBITDA of $375MM to $385MM vs prior $390MM to $400MM and consensus of $400.69MM.  In addition, 2015 Adjusted EPS is now $0.31 to $0.33 vs prior $0.33-$0.35 and consensus $0.34 (excluding $0.02 attributable to its bakery operations)

 

Same-Store Sales

  • Same-restaurant sales growth of 2.5 to 3.0% at Company-operated restaurants and company-operated restaurant margin of 16.5 to 17.0%

WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN   - chart 2 upgraded

 

WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN   - chart 3 new

 

THE LONG-TERM MODEL

The company's expected restaurant count for its long-term outlook includes sale of 100 Canadian restaurants and the sale of 540 additional domestic by the middle of 2016.  The company's long-term outlook includes the expectation for average annual system-wide same-restaurant sales growth of 2.25 to 3.0% beginning in 2016

 

WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN   - Chart 4

 

WEN – LIKE LONG-TERM BUT GOOD NEWS PRICED IN   - Chart 5

 

EPS TARGETS

  • High single-digit Adjusted EPS growth in 2016
  • High teens Adjusted EPS growth in 2017
  • Accelerating to 20% beginning in 2018

EBITDA TARGETS

  • Flattish Adjusted EBITDA in 2016
  • Low-single digit Adjusted EBITDA growth in 2017
  • High single-digit Adjusted EBITDA growth in 2018

The company also continues to expect to achieve the following system goals by the end of 2020:

  • Average unit sales volumes of $2.0M
  • Restaurant margins of 20%
  • A sales-to-investment ratio of 1.3 times for new restaurants

Attention Students...

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