The DJIA rose 73 points while Nasdaq was up 28 points.
Gaming stocks were somewhat mixed.
NYNY was up 5.3%, MPEL was up 4.3% and MGAM traded up
to a new high. UWN and CZR were both down nearly
8%, CPHC was down 5%, MNTG fell 4.1% and WYNN was down
nearly 3 points.
Nomura Securities said they maintained their Buy
ratings on MGM and WYNN. They met with MGM
management and while they did see a deceleration of
RevPAR growth in Las Vegas in the 1st quarter 2012, as
expected, overall RevPAR of +5% is being driven by
smaller group pricing that is less visible. We
actually believe 5% RevPAR growth is a positive.
Nomura said they expect higher VIP revenues in 2012
for MGM in Macau driving by the opening of its
in-house direct VIP rooms in December and renovations
on the second floor for additional VIP rooms.
As for Internet gaming, MGM is confident a federal
bill could be announced in the next few months with
the requirements that sites be linked to a land based
casino company. Nomura has a $16 target
price on MGM.
Nomura adjusted estimates on WYNN, lowering EBITDA
margins modestly for 2012 resulting in lower LV EBITDA
estimates. They made no change to their
Macau EBITDA estimates and said they have a $139 price
Wynn Resorts disclosed that they received a letter on
February 8th from the SEC asking it to preserve
information about the company�s $135 million
donation to the University of Macau. As we
feared, the lawsuit and allegations by Kazuo Okada has
attracted the attention of the SEC and we suspect
gaming regulators in Macau and Nevada are at least
taking a look. WYNN also disclosed more information
about the donation including that Okada was the only
vote against it on the board but that he was against
the length of the continuing $10 million a year
donations, not against the actual donation.
There is nothing that says the SEC will be launching a
formal investigation however, this is enough for us.
Given the slow growth environment WYNN has entered
into pending new jurisdictions or a Cotai development
approval, we believe the overhang from this
investigation will keep the stock range bound until
there is some resolution or a growth prospect
identified. We are moving to the sidelines
and removed WYNN from our 2012 MP at $111.15. We
believe LVS, MGM and even CZR can benefit from this as
investors may shift investment, just like WYNN
benefited when the investigations into LVS first were
Wells Fargo said based on month to date results in
Macau, gross gaming revenue is on track for a 4% gain,
much higher than what they were expecting.
WF is one of the more bearish analysts on Macau.
They believe January�s nearly 35% growth rate could
have benefited from high hold, as much as 500 basis
points. They estimate the year to date
revenue growth rate is 23.8% which is more than double
their 11% annual revenue growth rate projection.
WF said that as of February 12th market share data is
SJM - 30%, Galaxy 18%, LVS 17%, WYNN 14% and MPEL and
MGM tied at 11%. They believe MPEL and
Galaxy�s February results have been affected by low
hold but have improved from the first few days of the
month. SJM�s results are very
strong which puts us on red alert that it is either
high hold or SJM is going to spark a junket
promotional war. Right now we do not see
GGR growth as a risk factor given the stronger than
expected February but we are concerned that after
Cotai Central opens, casino companies like SJM and
Galaxy will revert to giving away the store to VIP
junkets to try to maintain share.
For the same reason we are concerned about what SJM,
Galaxy Entertainment, MGM and even MPEL may do after
Cotai Central, enter into a promotional war, is the
same reason why we are adding Asia Entertainment &
Resources (AERL) to the MP at $5.80. While AERL
has been a complete disappointment, it is the only
publicly traded VIP junket in Macau. If we
are correct and SJM and others start defending market
share by enticing junket operators, their
profitability will go up and AERL may finally rise.
We are not as aggressive as the others who are looking
for the teens, we think the stock has the potential to
trade up to double digits with a little luck.
Macau Daily Times reported SJM Holdings will submit
the master plan for its Cotai resort to the government
as early as this week and expects the government to
formally approve the land grant soon afterward.
SJM expects to invest US$2 billion in the Cotai Resort
with a good portion being non-gaming.
MGM Resorts International announced CityCenter
Holdings LLC and CityCenter Finance Corp. proposed to
offer $240 million in aggregate principal amount of
senior secured first lien notes in a private
placement. They priced the bonds to yield
5.824%. The notes are
additional of the $900 million 7.625% senior secured
first lien notes due 2016 with the proceeds being used
with existing cash to repay $300 million balance of
its outstanding $375 million senior credit facility.
This is another opportunistic move by MGM to use the
strong casino debt market to their advantage.
MGM also gave preliminary results for CityCenter
showing adjusted EBITDA beating estimates by 10%.
MGM announces earnings next week and between then and
now MGM China could announce a dividend and we believe
there will be more refinancing announcements, all
adding up to savings that the company is going to be
more than happy to detail.
Genting's Resorts World Sentosa will open the last two
hotels in their development on Thursday. Two
eco-luxurious hotels, the Equarius Hotel and Beach
Villas open on Thursday. The Equarius Hotel has 172
rooms while the Beach Villas consists of 22 units. The
hotels amenities include 7 meeting rooms, an event
pavilion, gym and a swimming pool. A new restaurant
named Forest will also open.
The Evening Sun reported Joe Lashinger will not give
up on his appeal of the PA Gaming Control Board
decision to award the final resort casino license to
ISLE�s Nemacolin Woodlands Resort. Despite his
own partner in the Gettysburg area casino proposal
saying he is done and will not join the appeal,
Lashinger continues his Supreme Court appeal.
What we don�t understand is what Lashinger hopes to
accomplish even if he wins. The locals in
the area have made it quite clear they do not want a
casino in the Gettysburg area, something that proved
fatal to the Foxwoods casino development. On top
of that, Rep. Paul Clymer has proposed a bill to
impose a 10 mile no-casino buffer zone around the
Gettysburg National Military Park and Flight 93
Maryland�s Attorney General said the proposed local
vote to decide whether Prince George�s County should
be allowed a casino is unconstitutional. A bill
was introduced last week to seek voter approval to
allow LV style table games at Maryland�s five
previously authorized slots venue and to add a sixth
casino in western Prince George�s County. The
Attorney General said making the state�s decision to
open a casino contingent on a local vote was
The Ohio Casino Control Commission meets this
Wednesday and their executive director said they
expect to announce the opening dates of the first two
In Sunday�s issue we disclosed the strange things
that are going on with the Seneca tribe including two
members allegedly taking part in the beating up of NY
Senator Mark Grisanti and his wife.
To make things even worse, the newspapers are having a
field day with the statements made by Seneca
president. His first statement was that the
Seneca Nation had no formal ties to the Diabetes
Foundation (the event that Grisanti had previously
attended) and therefore there was no connection to the
events that occurred Friday night under the
Foundation�s auspices. Three hours later he
updated his statement and once again said there were
no direct connection to the events but they said he
spoke to the Senator to express his concern, was upset
to hear what transpired at the Seneca�s Niagara
Falls property and admitted it involved several
individuals from the Seneca Nation. Seneca
president Robert Odawi Porter said he would hope for
better behavior and conduct from everyone at such an
event although it transpired sometime after the gala
ended. How does everyone know that
the Seneca members told the Senator he does not
support the tribe before they beat him up but the
Seneca president makes a statement as if to say this
was all about the Diabetes Foundation and not a simple
case of angry tribal members acting like thugs?