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THE M3: LVS IPO

The Macau Metro Monitor. November 9th, 2009.

 


SANDS CHINA IPO SAID TO RAISE AS MUCH AS $3.4 BILLION Bloomberg.com

LVS seeks to raise up to US$3.4 billion through an initial public offering of shares in its Macau business, in what could be the world’s fourth largest offering of the year.  The top end of the range is higher than the roughly US$2.5 billion the market had been expecting.  The offering consists of 1.87 billion shares, a 23.4% stake in the company, priced between HK$10.38 and HK13.88 per share.  The sale values Sands China at as much as HK$111 billion, or 16.6x next year’s EBITDA.




Bill Critical for Ailing Retailers

The President signed a bill Friday that includes an important provision for struggling retailers that likely flew under the radar since it’s more broadly recognized for extending the home buyer tax credit. The primary difference for retailers compared to the original stimulus package in February is that 1) larger businesses (above $15mm in revenues) are eligible and 2) it extends the loss carryback from 2 to 5 years for losses suffered in either 2008 or 2009. A quick screen reveals nearly two-dozen retailers that could benefit from this legislation; however, the cash realized will be material only to a select few. Given the lack of clarity of the exact accounting of the bill, we are not attempting to quantify the exact cash infusion anticipated, but merely flag those who are likely to benefit the most.

 

The companies that have been lobbying Congress for the loss carryback provision since February such as Liz Claiborne, Pier 1 Imports, and Office Depot are some of the retailers poised to benefit. Based on our screen of companies with either substantial losses in 2008, or over the LTM, and substantial earnings and therefore tax expenses paid from 2003 to 2008 we have identified several others including DDS, CHRS, TLB, ZLC and CROX.

 

Again, these aren’t the only companies that will benefit from this new legislation, but given recent liquidity concerns are likely to benefit the most from this added stimulus.

 

 

Casey Flavin

Director

 

 

 


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LVS/SJM BENEFICIARIES OF STRONG OCT IN MACAU

Read on for property details of a very strong October in Macau. LVS and SJM were the big market share winners, MPEL and WYNN the losers. 

 

 

As expected October continued the three month pattern of double-digit growth in  Macau.  October table revenues grew 44% y-o-y and 14% sequentially.  Of course October '09 had the benefit of two new properties, City Of Dreams (CoD) and L'Arc; and the benefit of an easy comp (October '08 table revenues were down -6%).  October VIP revenues grew 47% y-o-y and Mass was also strong at 37% y-o-y growth.

 

The big winners in terms of market share were Venetian/Four Seasons, SJM, Galaxy and MGM.  Losing the benefit of high hold in August, MPEL's share dropped back to earthly levels, and WYNN's share continues to be impacted by new supply.  Read on for property level details.

 

 

Y-o-Y Property Observations:

 

LVS table revenues up 34%

  • Sands was up 2.6% driven by a 6% increase in Mass and VIP growing 1%
    • Junket VIP roll decreased 5% at Sands, more than offset by direct VIP play (which doesn't get captured in reported VIP RC) or hold %
  • Venetian was up 52% with VIP increasing 82% and Mass increasing 15%
    • Junket VIP roll was up 57%
  • Four Seasons was up 130% y-o-y and up 30% from a seasonally slower August
    • Mass revenue increased 74% while VIP climbed 150%.  VIP roll was up 200%

 

 

Wynn table revenues were up 4.8%

  • Mass was up 26.5%, offset by a 1% decrease in VIP

 

 

Crown table revenues grew 50%, with both properties down from a strong and lucky August

  • Altira was down 30%
    • VIP roll was only down 5% but hold was weak once again at roughly 2.2% (note that Altira has a very small direct play business so the Junket RC is close to total RC at the property)
  • CoD table revenue was down 34% sequentially.  September benefited from very strong hold at the property which inflated win
    • Mass continued to ramp growing 20% m-o-m to $22MM
    • Junket VIP roll fell 3% sequentially.  Hold looks like it was weaker from August's high, but there could also have been growth in direct VIP play

 

 

SJM continued its hot streak, with table revenues up 74%

  • Mass was up 57% and VIP was up 86% 
    • As we mentioned last month, SJM had the benefit of L'Arc opening September 21st and we believe that SJM revenues should continue to stay strong with the addition of Oceanus in either December or early January

 

 

Galaxy table revenue was up 44%, mostly driven by a 50% increase in VIP win.  Mass was up 6%

  • Starworld continued to perform well with table revenue up 59%, driven by 66% growth in VIP revenues and 8% growth in Mass win

 

 

MGM table revenue was up 52%

  • Mass revenues grew 16%, while VIP grew 68%
  • Junket roll was up 45% 

 

 

Market Share:

 

- LVS share increased to 23.7% from 19.6% in September

  • Sands' share increased slightly to 8.4% from 8.3% in September
  • Venetian & FS share increased to 15.3% from a low of 11.3% in September

- WYNN's share decreased to 11.9%, the lowest share month since Wynn's opening

 

- Crown's market share plummeted to 11.9%, from a 17.5% high in September

 

- SJM's share ticked up to 31.6% from 31.5% in September

 

- Galaxy's share increased to 12.8% up from 10.6% last month

 

- MGM's share increased to 8% from 7% in September


THE WEEK AHEAD

The Economic Data calendar for the week of the 9th of November through the 13th is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.  

 

THE WEEK AHEAD - FIN NOV9

 


Bathroom Plasma, No More: Consumer Credit

Position: Short US Consumer Discretionary (XLY)

 

From Parts Unknown (our new Sector Head for Financials who we have yet to announce)…

 

Here’s a look graphically at Consumer Credit (updated for today’s 3pm data).

 

If a picture tells 1,000 words, then the song remains the same. It’s the second chart that’s actually more telling though. A full year after Lehman revolving credit is grinding to a halt at the second fastest rate in the last 12 months.

 

Further evidence that the consumer is (a) getting weaned off easy money by the still cash-strapped banking system, (b) voluntarily electing to save in lieu of buying the plasma for the 3rd bathroom.

 

Keith R. McCullough
Chief Executive Officer

 

Bathroom Plasma, No More: Consumer Credit - JS1

 

Bathroom Plasma, No More: Consumer Credit - JS2

 

 


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