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The last week begun with the Gaming Inspection and Coordination Bureau releasing the long-awaited Macau revenue data. The disappointing data resulted in a decline in share prices of leading casino operators like Wynn Resorts Ltd. (WYNN - Analyst Report), MGM Resorts International (MGM - Analyst Report), Melco Crown Entertainment Ltd. (MPEL - Snapshot Report) and Las Vegas Sands Corp. (LVS - Analyst Report). Meanwhile, Iao Kun Group Holding Company Ltd. (IKGH - Snapshot Report) also provided an update on monthly rolling chip turnover at its VIP rooms in Macau.

Other developments in the week included Las Vegas Sands’ annual meeting in New York, Melco Crown Entertainment’s update on its Studio City project and a further extension of the timing of cash tender offers made by Caesars Entertainment Operating Company, Inc. (CEOC), a subsidiary of Caesars Entertainment Corp. (CZR - Snapshot Report). (See last to last week’s recap here: Gambling Stocks Roundup for June 02, 2014).

Recap of the Week’s Most Important Stories

1.    Share prices of most U.S. based casino operators declined during the trading session on Jun 3, 2014 with Macau gaming revenues for the month of May falling short of analyst expectations. The Gaming Inspection and Coordination Bureau announced that gross gaming revenues for Macau increased only 9.3% to $4.1 billion in May.

The growth rate was lower than gross gaming revenue increase of 10.6% in the month of April and the lowest since February. Moreover, the number fell short of analysts’ expectation of 13.0% to 15.0% growth, according to media reports. (Read More: Casino Stocks Down on Disappointing Macau Data)

2.    Last week, Las Vegas Sands Corp. held an annual meeting of its shareholders in New York where its founder announced plans to hire an executive to run its non-gambling businesses and to replace Michael Leven, expected to retire at the end of 2014.  Also, the company provided an update on its expansion in Asia. It indicated that it is well on track to add thousands of hotel rooms by the end of 2015 post completion of St. Regis Tower and a Paris-themed casino in Macau. Additionally, the company intends to foray in Japan.

3.    Melco Crown Entertainment provided an update on the development of the Studio City project and announced that it is set to open in mid-2015. The property has key competitive advantages owing to its cinematic theme and vast array of unique entertainment and attractions, which would increase Macau's importance as a leading tourist destination in Asia. The company increased its investment for the project by $300.0 million to $2.3 billion.

4.    Caesars Entertainment Operating Company, Inc. (CEOC) has further amended the time for its cash tender offers to purchase any and all of the outstanding 5.625% Senior Notes due 2015 and 10.00% Second-Priority Senior Secured Notes due 2015 from Jun 3, 2014 to Jun 16, 2014. Last to last week, the company had extended the time-period from May 19, 2014 to Jun 3, 2014. (Read More: Gambling Stock Roundup: MGM Resorts Gains, Caesars Acquisition Loses).

5.    Iao Kun Group Holding Company announced that rolling chip turnover at its VIP rooms in Macau was down 4.0% year over year to $1.59 billion. Also, it was 7.6% lower than the turnover for the month of April. The decline was largely due to severe rainstorms for approximately 10 days in mid-May in both Hong Kong and the Canton Province that hurt customer visits. Win rate for the month of May 2014 was 2.32%.

Performance

Last week, share prices of all leading casino operators declined except Boyd Gaming Corp. (BYD - Snapshot Report) that gained a meager 0.64%. Share prices of WYNN Resorts, Las Vegas Sands Corp., MGM Resorts and Melco Crown Entertainment tumbled over sluggish Macau data and a cautious outlook provided by a couple of firms.

One firm, FBR Capital, indicated that China's crackdown on illegal money transfers, potential for tighter restrictions on visas for the region and a smoking ban would be a drag on Macau’s performance. It expects the Macau casino market to grow approximately 10.0% in the second quarter, lower than the consensus outlook. Meanwhile, another firm Wells Fargo & Company also lowered its 2014 revenue growth outlook for Macau to 11% from 13%.

Additionally, Caesars Entertainment and its subsidiary both declined owing to intensifying competition from leading U.S based casino operators. According to media reports, Caesars Entertainment Corporation received a notice of default from bondholders.

Bondholders claimed that the company has defaulted on its obligations by transferring assets, such as Bally’s Las Vegas hotel, to an affiliate, and by removing the parent company’s guarantee on the operating unit’s debt. (Read More: Caesars Entertainment Soars on Funding Plan). These bondholders own at least 30.0% of Caesars Entertainment Operating Co. second-lien, 10.0% bonds due in 2018.

Over the last 6 months, MGM Resorts, WYNN Resorts, Caesars Acquisition Company and Las Vegas Sands gained 29.55%, 27.40%, 7.19% and 3.27%, respectively while Caesars Entertainment, Boyd Gaming and Melco Crown experienced a decline of 6.97%, 4.45% and 1.96%, respectively.

Company

Last Week

Last 6 months

WYNN

-5.98%

27.40%

LVS

-3.85%

3.27%

MGM

-3.79%

29.55%

MPEL

-8.57%

-1.96%

CACQ

-5.38%

7.19%

BYD

0.64%

-4.45%

CZR

-1.27%

-6.97%









 

 

 

 

 

 

 

 

What’s Next in the Gambling World?

We note that gambling stocks have oscillated between gains and losses in recent sessions and investors can expect such movement in the coming days as well.

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