LEISURE LETTER (08/6/2015) - 880.HK, NCLH, RCL





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

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

August 7: 11:00am: Hedgeye Macau Call 

August 11: 4:30pm: STN 2Q CC

August 12: 7:00am: 880.HK 2Q CC 

August 13: 6:00am: G13.SI 2Q CC

August 19: 7:00am: 27.HK 2Q CC 


880.HK - SJM Holdings Ltd’s chief executive, Ambrose So Shui Fai, has called on the authorities not to ban smoking lounges from casinos in Macau.  
  • “Having smoking lounges inside casinos does not run contrary to the [government's proposed] total smoking ban,” the senior executive of the Macau gaming operator told reporters on Wednesday.  
  • Macau’s Secretary for Social Affairs and Culture, Alexis Tam Chong Weng, who oversees smoking control policies, has said several times that smoking lounges inside casinos are not completely effective in preventing non-smokers being exposed to secondhand smoke.



Paradise Co. LTD - Second quarter net profit for South Korean casino operator Paradise Co Ltd fell 47.1% YoY. Their profit was approximately KRW12.65 billion ($10.8 million) compared to approximately KRW23.93 billion in the year-prior period, the company said in a filing to the Korea Exchange on Thursday.  

  • During the reporting period, the number of “visiting days” by VIP gamblers from mainland China at Paradise Co properties fell 30.7% to 18,854 days, compared to 27,192 days in the second quarter in 2014.  
  • Paradise Co defines VIP visiting days as the daily accumulated number of high roller guests that participated in table games (excluding slot machine guests). In the second quarter 2015, mainland Chinese VIPs accounted for 44.9 percent of the 41,973 VIP visiting days recorded.
  • The rate of YoY decline in the firm’s casino revenue feel 50.2%, it said in a filing on July 6.


Takeaway: Ugly Q for Paradise, but MERS largely to blame for the slow down in visitation. 


Belle Corp. - Belle Corp, an investor at the City of Dreams Manila casino resort in the Philippines, is to raise approximately PHP1 billion ($21.9 million) by selling its remaining 47.85 million shares in Pacific Online Systems Corp to a Belle subsidiary.  In a filing on Wednesday to the Philippine Stock Exchange, Belle said it plans to use the sale proceeds “mostly for debt repayment”.


Takeaway: This sale comes at a tough time for Belle as they just reported a 50% YoY drop in net profit.  


NCLH - Norwegian Cruise Line is sending a new ship to Port Tampa Bay for next year's fall and winter cruises to the Caribbean: the Norwegian Jade.  

  • According to an announcement Wednesday, when the Norwegian Jade arrives in the Tampa Bay area in November 2016, it will sail seven- and eight-day itineraries in the Western Caribbean and 10- and 11-day cruises in the Eastern Caribbean.  
  • "We have strong demand from our guests to sail from Tampa," said Norwegian President and COO Andy Stuart in a prepared statement.



RCL -  TUI Cruises has started to promote its upcoming Asia cruises under the tagline: Book Today, Smile Tomorrow: Asia is Waiting. Sailing from Marina Bay in Singapore, Mein Schiff 1 will be offering series of alternating seven-day cruises to Malaysia, Thailand and Vietnam from November though March.  Rates start at 696 euro per person double occupancy for an inside stateroom or from 1,695 including round trip airfare from Germany. 



Chinese Business Travel Market- The campaign against corruption and slower economic growth in the mainland are curbing growth in the market for business aircraft in Greater China, consulting firm Asian Sky Group says.  

  • The firm’s annual report on business jet fleets in the Asia-Pacific region says Greater China’s fleet grew by 59 aircraft last year, having grown by 64 the year before.  
  • Reluctance to spend money caused by the mainland’s campaign against corruption and economic performance will probably keep deterring investment in business aircraft this year, the report says.


Takeaway: Growth is slowing across most metrics in China. However, per the Ctrip.com earnings call, business travel via high speed rail is showing signs of steady growth, and leisure travel across all transportation methods is equally strong.


Macau Property Market - Centaline Macau Property Agency Ltd believes only half as many homes were sold in Macau last month as the month before, and expects the number of sales to keep falling until the end of September. 

  • Centaline director Jackey Shek Po Tak told reporters that the fall was due to buyers and sellers taking their summer holidays and to turbulence in the stock market deterring investment in housing.
  • Shek forecast no immediate decrease in prices and an increase in the fourth quarter of this year.



Singapore Jubilee Weekend - Large crowds are expected at the Marina Bay area during the Jubilee weekend between Aug 7 and 10, due to the many activities held there.  The police said in a statement on Thursday that the Float @ Marina Bay, Esplanade Waterfront Promenade, Merlion Park, Promontory, Marina Bay Sands Waterfront, Gardens by the Bay and Marina Barrage are expected to be crowded. 





California - A pilot program by the California Lottery in which gamblers can buy lottery tickets at gas pumps in the Sacramento area is being embraced by players. 

  • “Play at the Pump” lets motorists buy up to $20 worth of Quick Pick tickets when they pay with a credit or debit card at the gas pump. 
  • The program – which started about a year ago in Roseville – has spread to 86 other locations in the region and Southern California. The plan is to expand to about 100 stations. Only California and North Carolina have the option, but other states are considering it.


Takeaway: Lower gas prices and initiatives like this will continue to drive lottery sales. FY2014 was a banner year for domestic lotteries. 



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.

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