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StumbleGaming stocks see boost on Macau revenue numbers
Tuesday, Jan. 5, 2010 | 11:20 a.m.
Shares of casino operators traded mostly higher Tuesday -- led by those with properties in Macau -- as investors remained upbeat about the latest gaming revenue figures for the Chinese enclave. The likely passage of a Pennsylvania gaming bill provided an additional boost.
Reports indicating that Macau gaming revenue increased 48 percent in December buoyed shares of Las Vegas Sands Corp., MGM Mirage and Wynn Resorts Ltd. on Monday, when the data first came out. All three companies have properties on the enclave, the only place in China where gambling is legal.
The news was still giving a lift to the stocks on Tuesday, as the industry tries to gauge if casino companies are beginning to recover from struggles they endured during the economic downturn. Gaming revenue has steadily improved in Macau since last summer, but U.S. results remain sluggish and worries about new supply coming online remain.
Shares of MGM Mirage gained 62 cents, or 6.4 percent, to $10.35 in afternoon trading. The stock has traded in a 52-week range of $1.81 to $16.89. Wynn's stock rose $3.73, or 5.8 percent, to $67.69. The shares have traded between $14.50 and $74.90 over the past year.
Others in the sector were also up, with Macau casino operator Melco Crown Entertainment Ltd. surging 55 cents, or 15.4 percent, to $4.14.
The market has also set its sights on Pennsylvania, where a table games bill is expected to pass within the next day or two. The bill would allow table games to be used by casino operators in the state who currently only run slot machines. The table games would initially be taxed at 14 percent, according to a client note by Susquehanna Financial Group's Robert LaFleur, with the tax rate declining to 12 percent next year.
The bill's passage would benefit both Penn National Gaming Inc. and the Sheldon Adelson-led Las Vegas Sands.
"Las Vegas Sands' Bethlehem property is about an hour closer than Atlantic City to the North New Jersey/New York City area, so the addition of table games could draw additional visitation from this area," LaFleur wrote.
Shares of Penn National Gaming added 24 cents to $27.99, while Las Vegas Sands' stock gained $1.31, or 7.9 percent, to $17.93.
Felicia Hendrix of Barclays Capital started coverage of Las Vegas Sands Tuesday with an "Overweight" rating and $24 price target, saying the casino operator has one of the most attractive development pipelines among the companies she covers.
"We believe the market is undervaluing the company's opportunities in Singapore and Macau, presenting investors with a buying opportunity," she said.
On Monday Goldman Sachs' Steven Kent reinstated coverage for Las Vegas Sands with a "Neutral" rating and a $16.25 price target.
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Wow! with all thes fifty five cent "Surges" in the gaming stock share prices It's gonna be happy days are here again ! .. NOT...
Fifty cent surges are 15 percent based on a 4.50 stock Price. My melco stock went up this morning "only" .50 cents however, I "only" have 2,000 shares so I am. "only" up 1,000 so far.
Las Vegas Sands did an incredible 20 per cent jump over the past two trading days. And Wynn and MGM Mirage are up a lot, too. That's really amazing. Looks like indeed that the Macau market is making up for all problems in Nevada. Adelson and his pals made smart moves entering the Asian market.
On Jan 20 Genting Singapore's Resorts World will open up with 4 hotels. I don't know if the casino will also open on that day, but it won't take much longer than that. The party has just begun :)
From Switzerland
that was a great day yesterday...
good to have LVS.
and if yesterday repeats ... lets's say 10 times, my MPEL loss is cleared :D
Melco seems like a super volatile stock. what casinos do they have? I am stuck in Boyd Gaming. Was speculating that they get Stations faster and cheaper, obviously Station is trying everything possible to avoid bankruptcy and hold on their properties......But the bet's still on.
I don't think that a day like yesterday can repeat 10x. This would be bubble-mania. Usually, news get prized in quickly, perhaps within 1 or 2 days, and that's about it. You need more and additional good news. But there are limits, always.
I also have concerns that the market has already prized in Genting's projected figures of the Sentosa Resort in Singapore and if the first results are not 100 per cent satisfying then the market will punish that brutally.
yes you're right, it will not repeat in that way. but on the long term, I'm optimistic that the gaming stocks will go up (especially the companies who are active in macau).
mpel has the large city of dreams complex in cotai across the street from the venetian and another casino named altira somewhere in macau (i think that one is smaller and for hingrollers).
i think singapore will become a success (at least for lvs) and I still hope to sell my lvs stocks somewhere near the highs of 2007 ^^
as you can see from my post, I planned for the new year to think optimistic, like sheldon adelson and jim murren do :D
Hey jsvegas
I think your optimistic stock exchange dreams are a bit too much of a hope. LVS dilluted its share volume to a degree that even 50 dollars/share is already far beyond the horizon. But that's how I see things. Perhaps investors like to bet up to a P/E of 100 in the gaming segment. I don't know. Do you know the current P/E (estimated) of LVS? I think it must be in the 100s!!! In other words, the current quote of LVS is nothing but a bet on bigger and better business in the future.
I don't think that LVS in Sinagpore with their Marina Bay Sands will be that much ahead of Genting Resorts Sentosa, for several reasons:
a) the Marina Bay has a super location, no question about that. But it's a super expensive matter. If they throw in 5 Billion usd into a casino project, then they expect to make money out of it. But if it's made of debt, than a carefully calculated interest rate of 8-10 per cent means that they must "win" 500-800 Million usd per year, just to pay the debt. That's more than 1 million a day, just for the debt matter!!! I think that a casino of that size can easily make 2 million a day, so there's a chance that the bet wins.
b) Resorts World Sentosa is not only a casino but also a tourist destination for families. They will open up several hotels , 4 of them apparently at the same time, on Jan 20, and the rest to follow. Sentosa Island is a cool little island for the fun seekers. I visited it once, a few years back, before they started construction, and it was fun already. For the people visiting Singapore, Sentosa Island is a must see, and if Genting Malaysia gets its highrollers into Singapore, then I will have no doubt about its success.
Genting has no casinos in Macau, from what I know, and that's a little disadvantage. On the other side, LVS has also its other stocks in Hong Kong, that's LVS Macau, and if you take all stocks together, then you will find out that the stock is not that cheap at this point. There are high expectations on the Singapore project. But I am also optimistic that these companies will make money as soon as the economy will pick up again, globally.
From Switzerland