LEISURE LETTER (6/10/2015)

Tickers: LVS, WYNN, G13.SI

company news

LVS - Two organizations have asked a Clark County district judge to unseal documents that could reveal business ties between LVS and Cheung Chi Tai and Heung Wah Keung, alleged organized crime figures in China.


Guardian News & Media, publisher of the British newspaper The Guardian, and the Campaign for Accountability, a new nonprofit watchdog organization, have filed separate motions to intervene and unseal records in the wrongful termination case brought by Steven Jacobs against LVS and Sands China Ltd.


Takeaway: We don't know what is in those documents but a seemingly forgotten risk could be re-emerging. With the anti-corruption program still going strong, can the Macau and Chinese governments look the other way if triad ties with Sands China are sufficiently proven?


Neptune - Neptune GD Group is planning to dismiss around 300 of its employees at the end of this month. The Forefront of Macau Gaming’s vice-president, Lei Kuok Keong, said that aside from the sharp reduction in staff welfare, many junket employers have slumped.  Meanwhile, he said, some others have streamlined their operations by closing unnecessary gaming rooms in casinos due to the shrinking VIP market.


Neptune warned on Tuesday it was likely to make “a substantial loss” for the year ending June 30, 2015 due to “the closure of Lucky Star, a VIP gaming lounge in Macau in which the group has a 20% interest, on July 1, 2015”. The facility, operated by a gaming promoter called Lucky Star, is at StarWorld Hotel.



Takeaway: More pressure on VIP and, specifically, on Galaxy.


Bloomberry - is looking to Taiwan, Korea and Japan as possible expansion opportunities. 



WYNN - The International Union of Operating Engineers (IUOE) has urged the city’s Legislative Assembly to take action to investigate a land deal involving MOP400 million (US$50 million) on Cotai that gaming operator Wynn Resorts made with two local firms in 2006. “The Assembly should further inquire whether government officials acted within their legal authority when they required Wynn Macau to deal with the Beijing Ho Ho group, even though Ho Ho and his associates had no documented claim to the Cotai land,” the union wrote.


Takeaway: This Union is relentless  


GENTING SINGAPORE - on June 10, bought back 761.7 thousand shares at S$0.91 each, bringing the total to 8.6482 million shares, or 0.072% of shares outstanding, under its repurchase plan.


China Lottery Sales - total lottery sales increased by 3.4% YoY to RMB 32.612bn in April 2015. But instant scratch card sales fell 9.2% and 16.9% in the Welfare Lottery and Sports Lottery, respectively.  


LEISURE LETTER (6/10/2015) - LOT1


LEISURE LETTER (6/10/2015) - LOT2

Takeaway: Scratch games continue to slump in China. Not good for SGMS's CSL venture.  


High-spending Chinese visitors to Japan - The government’s tourist agency vowed in a policy document to push forward its policies to ease visa requirements for foreign visitors and to improve facilities for visitors, including language services provided for travelers. Japan has proved particularly attractive to tourists from Taiwan, South Korea, mainland China and Hong Kong, who accounted for over 60% of its foreign travelers in 2014. Among them mainland Chinese tourists spent the most, splashing out 558.3 billion yen (HK$34.8 billion) in total in Japan last year.


Hengqin aims for visa-free transit for foreigners - The authorities on Hengqin Island hope to allow foreigners using the airports in neighboring Macau or Hong Kong to stay on the island for 72 hours without visas if they are going to or from somewhere else, Business Daily reports. Director of the Administrative Committee of Hengqin New Area, Niu Jing, has asked the central government for permission to do this.



Twin River (RI) - Twin River Casino will add 28 table games, including 16 poker tables, starting later this summer and into the early fall, Twin River Chairman John Taylor. The new games are a way to remain competitive, as a new slot parlor is set to open later this month in nearby Plainville, Massachusetts, Twin River spokeswoman Patti Doyle said. The gambling center in Lincoln currently offers 80 table games and more than 4,000 slot machines. The new games will be added to the facility's second-floor, a non-smoking area. Customers have requested table games in this area, Doyle said.


Takeaway: Twin River anticipating share loss in slot play from PENN's Plainridge Park's opening later this month. We're bullish on Plainridge and PENN.


Indiana SS Revs: +0.5% YoY

Missouri SS Revs: +2.6% YoY



PBoC cuts economic forecasts :

    • GDP growth 7% vs prior 7.1%
    • CPI +1.4% YoY vs prior +2.2%
    • PPI (4.2%) YoY vs prior (0.4%)
    • Retail sales +10.7% YoY vs prior +12.2%
    • Exports +2.5% YoY vs prior +6.9%
    • Imports (4.2%) YoY vs prior +5.1% 


Hedgeye Macro Team remains negative on 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.

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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.

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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.

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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.

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