Author Topic: 0200 - Melco international  (Read 5031 times)

yadayada

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0200 - Melco international
« on: April 27, 2014, 02:40:42 PM »
Melco Crown Seems to be one of the prime casino's in Macau. They own 33% of this worth 6.6 billion$ in MPEL
https://www.google.com/finance?q=NASDAQ%3AMPEL&hl=en&ei=s3RdU_iQF-eMwAOYkwE

And market cap of the hong kong traded stock is roughly 5 billion$. So roughly a 30% discount. And when the infrastructure is finished to get regular chinese people quickly over to Macau, and when more entertainment is built up, MPEL should be one of the better positioned company's to profit from this. They own some stakes in other really small company's.

But what is also interesting is they own a 190 million$ stake (current market value) in Melco lot. That stock more then doubled, and I think some big things are going to happen in the lottery business in China as that is being regulated now I think. Apparantly most of the lottery and sportsbetting business is underground, and to crack down on that a lot of smaller lottery operates will be shut down by the chinese government and licenses will only be given to a few large company's. And it seems Melco lot is set up to capture part of that.

Sahara investing had a really good write up on this, but he deleted his blog :( . So i guess i got some reading to do.

https://www.google.com/finance?q=ASX%3ACWN&hl=en&ei=2XxdU8i7Ds3FwAOJiAE
This company also owns 33.7% of MPEL.
« Last Edit: April 27, 2014, 03:54:48 PM by yadayada »


valuecfa

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Re: 0200 - Melco international
« Reply #1 on: April 27, 2014, 06:10:09 PM »
Melco Crown Seems to be one of the prime casino's in Macau. They own 33% of this worth 6.6 billion$ in MPEL
https://www.google.com/finance?q=NASDAQ%3AMPEL&hl=en&ei=s3RdU_iQF-eMwAOYkwE

And market cap of the hong kong traded stock is roughly 5 billion$. So roughly a 30% discount. And when the infrastructure is finished to get regular chinese people quickly over to Macau, and when more entertainment is built up, MPEL should be one of the better positioned company's to profit from this. They own some stakes in other really small company's.

But what is also interesting is they own a 190 million$ stake (current market value) in Melco lot. That stock more then doubled, and I think some big things are going to happen in the lottery business in China as that is being regulated now I think. Apparantly most of the lottery and sportsbetting business is underground, and to crack down on that a lot of smaller lottery operates will be shut down by the chinese government and licenses will only be given to a few large company's. And it seems Melco lot is set up to capture part of that.

Sahara investing had a really good write up on this, but he deleted his blog :( . So i guess i got some reading to do.

https://www.google.com/finance?q=ASX%3ACWN&hl=en&ei=2XxdU8i7Ds3FwAOJiAE
This company also owns 33.7% of MPEL.

I know the company MPEL well. I had a stake in the company shortly after it went public and later sold. The junkets control the market over there in Macau, since they have the connections and provide the player rebates. The cut the junkets take is massive! I don't recall the exact cut they take, since it has been a while since i studied the market over there. But the one thing to know is that he who has control (pays them enough) the junkets wins. As far as the the product, it is a nice property, down on the Cotai strip, however when i was there, the north end of the island was where the majority of the action was, despite the media saying Cotai was the area to be. I think Wynn Macau is the best product on the island. MGM is great too, but the location is not so great. Sands is probably the busiest and most fun to gamble in for the non-high rollers, and also has a great location. I went to visit the casino and some of their employees there several years ago. Here's a few pics i snapped in the 1 day i was there: http://s1202.photobucket.com/user/melcocrown/library/?sort=3&page=1

You are not supposed to take pics inside the casino, that's why they are blurry and at odd angles. Some pics are from inside MGM, and Venetian too
« Last Edit: April 27, 2014, 06:15:18 PM by valuecfa »

yadayada

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Re: 0200 - Melco international
« Reply #2 on: April 28, 2014, 04:37:59 AM »
Doesn't melco crown have the highest revenue per table from all those macau casino's? Also the number of tables is still limited. I think they do that to keep profits high (and so taxes are also high).

DTEJD1997

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Re: 0200 - Melco international
« Reply #3 on: April 28, 2014, 07:23:23 AM »
What is going on in Macau is simply incredible...

Has anyone looked at Emperor Entertainment (HK: 0296, OTC: EPETF)?

A very interesting situation...

Probably not as high a quality an operation as Melco or Sands or Wynn...

But essentially no debt, plenty of cash, P/E of 8, and a healthy & rising dividend.

yadayada

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Re: 0200 - Melco international
« Reply #4 on: April 28, 2014, 08:08:08 AM »
One thing I hate about these hong kong company's. Why do they pay out so little ? They keep hoarding cash. Probably 1/3 of their market cap in cash now right? They generate about 5-600 million HK$ in cash on a 4.5 billion$ market cap . What are risks like for shareholders here? A lot of these hong kong company's trade at discounts. Same with Keck seng, they also have those ridicilous cash hoards.

There is also this holding company:
https://www.google.com/finance?q=HKG%3A0163&hl=en&ei=JHBeU5jHOaiAwAPF3AE

But it seems 73% is owned by a person named Semon Luk. And that holding company owns the other crown holdings like the watch retailer, the financing section etc. Could be a discount, but also a big risk? are they hoarding up cash and then steal it from under the nose of share holders?
« Last Edit: April 28, 2014, 08:26:57 AM by yadayada »

yadayada

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Re: 0200 - Melco international
« Reply #5 on: April 28, 2014, 08:31:26 AM »
Emperor int holdings latest report:
http://www.emperorint.com/PDF/Annual%20Reports/e0163%202013_14%20interim%20report.pdf

Share price of 1.75 and according to their report:
Liquidity And Financial Resources
The Group owned key property portfolio of over 5 million square feet. As at 30
September 2013, the Groupís net asset value and net asset value per share
amounted to HK$24,370.2 million (31 March 2013: HK$23,348.4 million) and
HK$6.65 per share (31 March 2013: HK$6.37 per share) respectively.

Why the big discount of 73%?

And it yielded like 7.5% in dividends last year lol. Anyone know what is going on here?

if you look on page 114, what exactlly do they own? It says they own emperor hotel holdings? It is all kinda confusing
http://www.emperorint.com/PDF/Annual%20Reports/e163Annual2012-2013.PDF

from the keck seng write up
Quote
The only legitimate risk we have identified is the risk of a management buyout on the cheap.  Our analysis strongly suggests that liquidation values are well in excess of carrying values on the balance sheet, and the stock is woefully underfollowed at the present time.  Itís possible that management could try to take the Company private without mentioning the hidden value and attractive prospects in Macau, U.S. and Vietnam.  However, takeover rules in Hong Kong enable minority shareholders to block a takeover proposal with only 10% of the minority shares, which in this case would be only 2.56% of the total shares outstanding.  We believe we have identified enough shares in the hands of sophisticated investors to avoid this risk.
Seems like risk is relatively low if only 10% has to decline the offer? This is from the VIC keck seng write up.
« Last Edit: April 28, 2014, 08:47:41 AM by yadayada »

valuecfa

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Re: 0200 - Melco international
« Reply #6 on: April 28, 2014, 10:00:55 AM »
Doesn't melco crown have the highest revenue per table from all those macau casino's? Also the number of tables is still limited. I think they do that to keep profits high (and so taxes are also high).

Back when i researched the company a few years back they had the highest revs/table, but far from the highest margins. They were buying their business.  Wynn had far less revenues, but far higher profits at the time. Yes taxes are massive in Macau, multiples of what they are in Vegas. After taxes, and junkets take their cut, the casino is left with a miniscule amount, on a massive initial revenue amount. The actual rolling chip volume in Macau is just breathtaking, but there are all kinds of caveats. There are several other risks, such as the Ho family in general...money laundering, the CEO's daddy being a triad gang leader in Macau for decades. The biggest risk, and the main reason i sold is the likelihood of Melco shifting business to other much more profitable locations, as well as far too much reliance on business via junkets. If you have a high roller in Hong Kong, why would you want them to gamble at your Macau property, when you can have them gamble at another property you own interest in where taxes are nowhere near as ridiculous as they are in Macau. There was talk of Melco and Crown forming other joint casino ventures in other nearby locations, where taxes would be lower. Also, i don't trust the regulators in Macau, i guarantee you there is plenty of skimming/bribing going on in Macau...the junkets have too much power and influence
« Last Edit: April 28, 2014, 10:08:14 AM by valuecfa »

yadayada

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Re: 0200 - Melco international
« Reply #7 on: April 28, 2014, 10:14:17 AM »
Interesting. What about mainland china tho? They are going to make it much easier and faster for regular chinese people to enter macau in 2014 and 15 with some kind of electronic pass? And with a trainline going into macau. Also much more entertainment to match las vegas in the near future.