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LEISURE LETTER (07/28/2015) - MPEL, G13.SI, WYN, CCL, Airbnb

TICKERS: MPEL, G13.SI, WYN, CCL, Airbnb


 EVENTS   

 

July 28 8:30am: WYN 2Q CC ; PW: WYNDHAM

July 29 10:00am: HLT 2Q CC ; PW: 74328196

July 30 9:00am: HST 2Q CC

July 30 10:00am: MAR 2Q CC ; PW: 66506287

July 30 1:00pm: HOT 2Q CC ; PW: 69941686

July 30 8:30am: STAY 2Q CC (1877)

July 31 10:00am: RCL 2Q CC 

August 1

  • Wild Rose Jefferson opens
  • St Regis Macau opens

August 3: 8:00pm: CTRIP 2Q CC ; PW: 40828276

August 4: 11:00am: MGM 2Q CC ; PW: 0575269

August 4: 5:00pm: AWAY 2Q CC

August 6: 8:30am: MPEL 2Q CC ; PW: MPEL

August 6: 8:30-1pm: RCL INVESTOR DAY (NYSE)

COMPANY NEWS      

MPEL -  Casino operator Melco Crown Entertainment Ltd says that next Monday, it will publicly announce the date of the "Grand Opening” of Macau casino resort Studio City.  The company has organized a tour of the venue for the media, followed by a press conference in the afternoon that day.  

ARTICLE HERE

Takeaway: We're hearing only a 150 table allocation for Studio City. The property probably won't reach its potential until the ownership issue is resolved. 

 

G13.SI - Genting Singapore bought back 3.6 million shares on July 28 at $0.895. 

 

WYN - Recently welcomed three new affiliated resorts in China to its vacation exchange network.  The properties are Shangshanqi Villa Resort and Taoyuan Hot Spring International Hotel in Chengdu, Sichuan Province, and Bo'ao Holliyard Seaview Resort in Hainan Island.  The signing of these agreements expands RCI's portfolio of resorts in China to more than 55 properties.

ARTICLE HERE

 

CCL - Today announced that its Italian brand, Costa Cruises, will build two new cruise ships as part of an agreement with Meyer Werft to construct four next-generation cruise ships with the largest guest capacity in the world. In June, Carnival Corporation announced the other two ships included in this multi-billion dollar contract are destined for its German brand, AIDA Cruises.  

  • The two new ships for Costa Cruises will be built by shipbuilder Meyer Werft at the company's shipyard in Turku, Finland, with deliveries expected in 2019 and 2020. Each new cruise ship will exceed 180,000 gross tons, offering more than 2,600 passenger cabins and 5,200 lower berths to comfortably accommodate a total capacity of 6,600 guests.
  • Pioneering a new era in the use of sustainable fuels, these new ships will use LNG to generate 100 percent of the ship's power both in port and on the open sea – an industry-first innovation that will significantly reduce exhaust emissions to help protect the environment and support the company's aggressive sustainability goals.
  • The four-ship contract with Meyer Werft is part of a larger previously announced strategic memo of understanding with leading shipbuilders Meyer Werft and Fincantieri S.p.A for nine new ship orders between 2019 and 2022.

ARTICLE HERE

Takeaway: Cost efficient and Eco friendly appears to be the new mantra for cruise ship construction. 

 

Airbnb - Airbnb is planning its Africa Expansion. The San Francisco company, which allows people to rent rooms in their private homes to travelers over the Internet, held an event July 27 in Johannesburg, where Airbnb Chief Executive Officer Brian Chesky walked local reporters through the company’s ambitions in the world’s second-most populous continent. 

  • With news spreading mainly through word of mouth, some 9,400 homes are for rent in South Africa, making it the company’s largest market on the continent. The biggest cities for Airbnb are Cape Town and Johannesburg, and the company says listings in South Africa are increasing 138% a year. 
  • The number of people staying in Airbnb homes in the country is growing 257%.
  • In the coming weeks, Airbnb says it will also roll out its “host guarantee” in Africa, which reimburses hosts for up to $1 million U.S. dollars if a guest damages their homes.

ARTICLE HERE

Takeaway: Regulations may be a headwind in some markets, but it hasn't stopped Airbnb's relentless push for growth and expansion worldwide. 

INDUSTRY NEWS 

Macau Blue Card Holders - The number of non-resident workers, commonly known as blue card holders, rose 16.2% YoY to 180,523 at the end of June, the Human Resources Office (GRH) announced on Monday.  The number increased by 1,107 between May and last month.   Mainlanders accounted for 65 percent of all imported labor. Other major segments were hired from the Philippines (23,152), Vietnam (14,203), Hong Kong (9,708), Indonesia (4,087), Nepal (3,521), Taiwan (1,600), Myanmar (1,249), Malaysia (1,232), and Thailand (1,034).

ARTICLE HERE

Takeaway: Good news for Casino operators with current projects and those planning to build. 

 

Saipan Casino - Imperial Pacific International Holdings Ltd says it has opened its casino on the western Pacific island of Saipan.  The company told the Hong Kong Stock Exchange that its temporary casino premises in Garapan on the island had opened for business on July 26.  Imperial Pacific International has plans to build a casino-resort on Saipan in five phases.  It has a 25-year licence to run a casino.

ARTICLE HERE

Takeaway: Let's not confuse Saipan with Japan

 

Thailand Casino - Thailand’s latest outbreak of casino speculation began in June. Two members of the post-coup military government’s National Reform Council suggested casino to bolster tourism.  The pair said they represented about a dozen members of the advisory panel and planned to submit a more detailed proposal to the government.  

  •  “We want to invest in Thailand if we are given permission,” LVS vice president for communications in Singapore Krist Boo said
  • “For Thailand, we would love to have an integrated resort at a place close to the city center or financial center, near the international airport,” Boo said, according to Thailand’s The Nation newspaper.

ARTICLE HERE 

Takeaway: Could this be what LVS's Adelson was referring to?

 

Lifestyle Hotels and Threats to the Industry - Lifestyle hotels might be lodging option du jour for investors, operators and consumers, but they aren’t immune from some of the challenges facing the rest of the hotel industry.  The most notable challenges, according to panelists speaking during the second stop on the ALIS Summer Update tour last week at the Chicago Athletic Club Hotel, involve rising pressure on the wage and rental-economy fronts.

  • “To our business, (the biggest issue) is the wage issue, and particularly as it relates to labor unions,” said Niki Leondakis, CEO of San Francisco-based Commune Hotels 
  • “Airbnb is a concern,” said Raul Leal, CEO of Virgin Hotels. “It should be a concern for properties that don’t provide an experience.” 
  • Because Airbnb tends to be most successful in high-density, urban markets where lifestyle hotels also thrive, regulatory issues will have a big impact, panelists said.
  • The executives agreed that facing these pressures can be beneficial for all hoteliers.
  • Leondakis pointed to the growing trend of ditching 24-hour room service in favor of a grab-and-go concept in which guests get their food to-go from a lobby restaurant concept as an example. 
  • “You’ve got to think about F&B completely differently with this cost of labor,” she added. 
  • “In some ways, Airbnb has caused all of us to up our game,” he said. “They’re doing some things that are really, really relevant that consumers want.” 

ARTICLE HERE 

Takeaway: More commentary on the realistic threats to hotels. Airbnb and rising labor costs are major rising in that industry. 

MACRO 

Hedgeye Macro Team is incrementally bearish on U.S. consumption growth, based on the consumer's continued efforts to deleverage their household balance sheet combined with the peaking of consumer confidence and stagnating labor productivity.   

Takeaway:  For now, US regional gaming slowed in June but North American cruise pricing still doing well.


LNKD: Thoughts into the Print (2Q15)

Takeaway: LNKD doesn’t need much to produce upside to rebased 2015 estimates, especially following its considerable investment into its salesforce.

KEY POINTS

  1. NEW BEST IDEA LONG: We recently went long LNKD on 7/14.  The 1Q15 hiccup that led to a +20% gap down in the stock was largely due to a big salesforce investment into improving selling environment (accelerating macro tailwinds).  Management used the 1Q15 hiccup to rebase consensus expectations, which are now inline with guidance (vs. over) for the first time in over a year.  LNKD doesn’t need much to produce upside to 2015 estimates, especially given the aforementioned salesforce investment, which we see as a coiled spring.  See note below for more detail.
  2. 2Q15 = COILED SPRING: Mgmt gave themselves enough breathing room with the light 2Q guide.  Consensus concentrated their estimate reductions into its Marketing Solutions and Premium Subscription segments, making the swing factor its Talent Solution segment, which is where we are most bullish.  We’re expecting a 2Q15 beat and 2015 raise, with 3Q guidance coming in above consensus.  There is a small risk that 3Q guidance falls to impress for no other reason than mgmt conservatism, but we believe mgmt already played that card when it cut its full-year outlook after beating its 1Q15 guidance.  

 

LNKD: New Best Idea (Long)

07/14/15 08:00 AM EDT 

[click here]

 

 

See link above for incremental detail and analysis.  Let us know if you have any questions or would like to discuss further.

 

Hesham Shaaban, CFA

@HedgeyeInternet 

 

 


July 28, 2015

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BULLISH TRENDS

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BEARISH TRENDS

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AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR)

Takeaway: We're adding AHS to our short bench as a way to play the ACA Tailwind/ACA Headwind Theme. Dropping DGX to Long Bench.

  • AHS SHORT BENCH (NEW)
  • DGX CLOSING LONG, MOVING TO LONG BENCH (Link to Note)

ADDING AHS TO SHORT BENCH | ACA HEADWIND THEME

AHS is a nurse staffing company who's current sentiment rank is among the highest across our universe of companies (short signal) and may be a good candidate for our ACA Tailwind/ACA Headwind Theme.   The theme assumes that the ACA Tailwind, which brought with it a massive one-time expansion of insured medical consumers, will mean revert in terms of enrollment growth and per member spending.  Our ACA Tracker looks at monthly data which currently shows slowing enrollment and flattening per enrollee spending which is significantly elevated compared to pre-ACA levels.  AHS has done well as the marginal supplier of nurse staffing while the ACA drove demand across the Healthcare landscape, including HCA and other hospitals where volume growth is at multi-year highs.  We expect the ACA Headwind will emerge as early as 2H15 and carry into 2016 as new enrollment and pent-up demand work through the medical delivery system.  Below are specific monthly time series which we'll use to track AHS business trends as we build out the work on AHS and while monitoring our ACA Tracker for deceleration.

 

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 Position Monitor

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 AHS Health Care Employment

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 AHS Jolts

 


The Macro Show Replay | July 28, 2015

 


Replay | Q&A with Hedgeye Healthcare Sector Head Tom Tobin

ARE you a healthcare investor? you can't afford to miss this call... 

 

Earlier today Healthcare Sector Head Tom Tobin and Healthcare Analyst Andrew Freedman discussed new developments to their Best Ideas and shared updated analysis.

 

A few of their Best Ideas report this week including CPSI (Best Idea short), HOLX (Best Idea long), and ZBH (Best Idea short). They also touched on ATHN and answered questions from viewers. 

 


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 80.28%
  • SHORT SIGNALS 78.51%
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