July 8, 2012- Stacking up my chips and cards , rolling the dice with Philippines’ casino tycoons! (Casino Industry Overview)

Philippine Stocks in Focus:
1) Bloom
2) Bel/Lr/Sm
3) Agi
*****
The investment and speculative fever has been hot in the exchange for many reasons ( strong buying demand, strong market sentiment, hope of bringing tourists from abroad as well as many emotional nuances that normally accompanies typical frenzied stock market participants.)

Below’s a snapshot of the most actively traded stocks in the Philippine index last Friday.  If I only have a 20 most active stocks by trading value for the past two weeks, I’m sure you can see in the list BLOOM,BEL,LR and to an extent AGI (due to the short term selling flows, with competitor threats to the new casinos to open in Bayshore complex).


World class casinos, world class partners and Unrealized revenues and earnings baking in the share prices:

Faceless Traders’ Shortcut Methodology to Understanding the Industry (note i am not a gaming analyst):

—> Compare the Macau , Singapore , Malaysia, Australia’s existing casino businesses, their revenues, ebitda etc.

Existing Players in Asia and Listed Casino Stocks: (I didn’t include the US casinos, because they are not the competitors of Philippine casinos.  Also, the target market of Philippine casinos will predominantly come from Asian peers)

(Partners of BEL/LR/SM) – (For more information, read this Yahoo article: Packer, Ho in $1 Bil project)

1.) MPEL – Melco Crown – multiple listings in HK Exchange and NYSE in the US.  Ticker symbols: HK:200 and NYSE:MPEL – Majority Owned by Lawrence Ho.

2.) Crown Limited (CWN.AX) – listed in Australia – Mr. James Packer’s company

Other Casinos (Macau, Singapore, Malaysia):

1.) Galaxy Entertainment – HK:27 – Owned by Mr. Liu Che Woo.  The most memorable part about Galaxy for me is that he didn’t pay the bonds he issued to investors.  He issued bonds before, but just paid them 50 cents to a dollar during the 2008 crisis.  Anyway, his casinos are doing well and his stock’s performance in HK exchange was phenomenal.  From around 50 cents to 25 dollars and now to 19 dollars.  All in just 4 years.    (All figures are in HKD – please go to http://www.bigcharts.com 10 year chart for more information.)

Read this for more info on Galaxy and read the company website too.  http://www.forbes.com/sites/robertolsen/2011/03/30/casino-billionaires-profit-misses-estimates/

2.) Sands China – HK:1928 (Owner of Venetian Macau for instance) – the Las Vegas Sands is also listed in NYSE and is owned by Mr. Sheldon Adelson 🙂  He also owns Marina Bay Sands in Singapore.   Study yourselves.  I’m just trying to give a backgrounder here.  If you want to know more, just go straight to the company’s website.  At the minimum, just read Wikipedia http://en.wikipedia.org/wiki/Las_Vegas_Sands

3.)Wynn Macau – HK:1928  – this only covers Mr. Steve Wynn’s Macau casinos.  Every other casino he has in Las Vegas stays in Vegas. 😀  There’s WYNN:US and many more.

4.) MGM China Holdings – HK:2282 – Owned by Ms. Pansy Ho, daughter of Stanley Ho ( Ms. Pansy Ho also owns Shun Tak holdings (HK 242)  that owns the ferry boats and the real estate in Macau, as well as the hotels.  She’s basically Macau’s land lord goddess.  She’s very pretty by the way, and is a very sharp businesswoman. You need to understand Chinese to read the stuffs written about her in the HK newspapers.  Sadly, I just read english translated hk newspapers from time to time such as South China Morning post and Apple daily, and only the free ones.  I don’t pay the online premium versions, and I only read about the MGM deal of Ms. Ho due to my previous HK related market job.  I ask my dad to even translate the Chinese newspapers because I cannot understand Chinese stock market forums.)

5.) SJM Holdings – HK:880, Recently from last I checked(around 2011 a year ago), Mr. Stanley Ho gave his shares of SJM to Mr. Lawrence Ho, but I think the father still has majority ownership.  Just like all gossip columns, the Ho family is similar to many Chinese tycoons who have plenty of wives and concubines.  SJM is still the largest casino in terms of mass market share with stakes in Grand Lisboa, and every casino that’s not in the Cotai Strip 😀  Everything you spend in Macau, stays in Mr. Stanley Ho’s pocket.  It’s just that simple.  It’s the adult Disneyland and his family has been the owner of all the entrance tickets from food,drinks,booze and whatever comes in between until Sands and Wynn came to Macau.

6.) Genting Malaysia and Genting Singapore – Genting is the proud partner of Mr. Andrew Tan’s Resorts World.  Genting has Resorts in Malaysia and Singapore too.  Visit them if you’re an avid fan 🙂

http://www.rwgenting.com/

Philippine Casino Stocks Background:

High Gambling Tendencies of Filipinos Over The Years

1) For several years now, Philippines have always had high gambling tendencies (Every Pacquiao fight is met with unreported bookie bets, NBA fans betting on the Miami , Oklahoma finals to name just a few examples… And the recently Calata ipo must in itself represent that risk appetite of Filipinos – numbers don’t lie.  Filipinos’ gambling tendencies have always been part and parcel of life whether through jueteng, sabong or whatever the Spaniard conquistadors gave to us.)

“Angping” stocks have always had their fair share of happy profitable traders and hopeful bashing retails who complain why they lost their shirts.  People still hoping for their get rich quick tendencies will always meet a butcher willing to slaughter the many preys without any mercy either. I abhor outright penny stock boiler room operations , as I view this personally with white collar crime, however , I let the system persist because if regulators around the world think it’s the way to teach newbies in the markets, then so be it. Plus, I’m just your normal, happy, sometimes lucky, sometimes losing and hopefully net net profitable faceless trader. 🙂

In my view, third liners will always have their place in the markets but that doesn’t mean you need to enter their territories.  As they say, where money goes, so do traders who just have discipline to trade go. Caveats as the warning for all who tread the deep seas. Tulip bubbles, NASDAQ bubbles, Facebook at 100 bil valuation with only an income of 1-2 bil.   To each his own bitching favorite stock to trade 🙂 All is fair in love, war and the markets. It’s all legal my friends and foes but while everything’s permissible, not everything’s too good to be true. Friendly reminders 🙂  Isn’t the market such a happy place?  People who have gambling addiction can always have a stock they can play with , be it in the Philippines, Hongkong, China, US or any other place in the world!

Hope Snow white’s evil queen taught you well in the art of the apple and the poison within the beautiful exterior. 🙂

*****

Volatile Nature of Casinos’ Revenues and Earnings

2) Casinos stocks can always trade wildly. Same goes for technology stocks because of the sheer impossibility to gauge it’s revenues and earnings.  Will Apple sell 20 million iPad minis? 30 million iPhone 5s?   Your guess is as good as mine .

Just like any Pacquiao fight, we Filipinos would bet on the winner but if the mafia judges say Bradley wins, statistics don’t matter either. Hence the impossibility to trade Chinese markets’ fundamentals sh*t casinos. If you want transparent markets, domestic companies you understand well should do the trick. Just an example, if you eat chicken joy in Jollibee once or twice a month, then no matter how JFC would cook its books, you can at least gauge a range of income that it should report end of the year. I’m not saying they cook them.  First and foremost, there’s the accounting agencies that’s supposed to give qualified and unqualified opinions. Of course, I believe the numbers. 😉

Exhibit A: Kabloom bloom bloom! Bloom! (Stock has risen from 8.30 to 10.46 in just 2 weeks!  What if it falls back to earth?  No One knows!)

While a Php 100++ Bil valuation on Mr. Enrique Razon’s Bloom may seem incomprehensible by some market know-it-alls, the truth is the admission of unchartered territories and inability to predict earnings leaves each speculation with a valid reason for 10,12. 15 or what number you want to insert.

Unlike the BW resources scandal mired in most Filipinos’ eyes as the primary culprit for the decline of the index during 2002 (Most people swore they’d never trade markets again – I was still in my high school watching my backstreets and spice girls then, only overheard how people lost shirts, houses, equitable bank all due to One big trade gone wrong) Of course somebody profited right?

Ok. Moral lesson is never bet money you cannot afford to lose. 🙂

3) Snapshot of MPEL’s quarterly EBITDA and Morgan Stanley’s estimates.  Notice that during the financial crisis, (2008) no one will play the casinos and Melco couldn’t even earn more than 25Mil dollars in a quarter but during the 3Q2011, it was earning 240 Mil dollars.  Notice the discrepancy?  Well expect more of that to happen.  Because the truth is, no one knows how much a casino will earn in a quarter. Even the owners of the company don’t know.

4.) Sample Gaming Valuation Table (Credit goes to research analysts from Morgan Stanley Feb 15 2012)

Final words :
No one tells you to buy or to sell. These are trading stocks. If you plan to do long haul investing, these are similar to mining companies (well slightly) who will eventually have earnings – example lepanto in 6-7 years but so far isn’t producing any earnings yet.

As long as your estimates are in line with a safety of margin, you can at least have a number that you didn’t pick from the clouds and your targets are at least plausible. Sometimes it’s better to be lucky than smart. See 27 hk – galaxy to the rocket skies 🙂  That was a starship that really lived up to its name. To Galaxy and Beyond! (Wait that’s toy story’s Buzz light year!)

If you think the casinos are pricey , then just trade them and don’t get addicted to them.

Philippine Casinos will be a $3 bil industry, $4 bil industry, $5 bil industry, $10 Bil industry – those are huge ranges of prices.

Bloom at Php100 Bil, Php120 Bil, Php150 Bil, Php 50 Bil? Who knows?

What about AGI,BEL,LR?  Can you value them?  Honestly?

Once you see weird prices, it’s easy for people to say expensive or cheap but it’s never easy to call the bluff when your money’s on the line. The sooner you admit that you don’t know, the better you can trade.

Attack only once you know your cards well. Don’t ever bet against the house when your chips are down.

In life and the markets, if you don’t know who’s the patsy, then it must be you.  – Mr. Warren Buffett (famously quoted from a game of bridge)

Remember to keep your winners and cut your losers 🙂

I repeat this every time to myself but get tempted to sell as well.

( I sell half  or 1/3 or 1/4 of the position to lock in some gains – a compromise so that I’ll have my jackpots – Trading principle taken from Boss EKL of COL Financial Group.)

I’d need these mainland Chinese who work in 168 to go and play slot machines and bet cards on the VIP rooms to continue the rise of the casinos.  Also, Philippines needs to attract all the tourists from Singapore, Macau, and mainland Chinese.  Interestingly, the more casinos that get opened in the Philippines, the more tourists, the more jobs and the higher consumer spending will be in the Philippines.  Every vice has its good and its bad.

🙂

– facelesstrader laleelalala.

P.S.

A client told me it’s against his religion to have casinos in his portfolio as these wreck families’ lives, hence no bloom,bel lr and AGI coz it’s liquor casinos, and related to sin stocks. no Philip Morris coz it’s cigarettes etc. No prostitution houses in the portfolio (there’s one listed in Singapore, I heard from a friend but I don’t know exactly what that stock is and I’m not really interested in making prostitution stocks part of my portfolio).   Whether those reasons makes sense, we’ll just leave it to the client.

Honestly, I believe anything and anyone can wreck someone’s life – a woman, a man, your religion, your work, your boss, your parents, your vices, your stock portfolio, your constant fast-food junk food, only if you choose to let them wreck your life.)

If we will be slippery slope with every facet of our lives,then just evaluate where you spend most of your income. If you always shop in S&R, consider partaking his profits by buying his shares. ( Yes it is listed in the exchange with ticker PGOLD.  If you drinks Starbucks every other day, then check sbux listed in newyork!  If you love uniqlo clothing, take a look at fast retailing in Japan,also SM coz they are partners here.  Louis vuitton is lvmh … Apple iPads is in NYSE. Check how much you are paying for each peso, dollar or euro that they earn and do your investing / speculating . You have a buffet of choices. Race cars anyone? Check out tesla of Mr elon musk $tsla 🙂

I’m still a Christian and I buy all these sin stocks, whether conceptual or earnings – hence sjm, galaxy, las Vegas sands, Wynn Macau even if I hear mafia crimes and lives being destroyed. Money laundering and whatnots – if you read wall street journal, you can see it printed in newspapers.

However, I’d gladly put my profits from the stockmarkets to businesses that help others while earning (E.g. chicken farms, piggeries, fish farms, urban aquaponics businesses ) or buy yellow boats for Filipinos who need them to go to school. Simple as that. Sorta like robin hood but in a market related sense ?

Dont complicate your life even more with stupid isms and rules, it already is complicated.
Use your mind. Be open minded. Be a sponge. Be neutral as much as you can.

In the markets, you follow where money flows.

I know that sometimes money flows to sin stocks and of course I cannot ask you to trade something that negates your philosophies in life. I’d find socially ethical companies for you, no worries.
At least now we are clear if your portfolio underperforms 🙂

To stop the killing of sharks fins, stop eating sharks fins soup! Supply and demand! Economics pervades your life, you may just not know it.

Politics matter too. For the first time, we have an honest president. Mabuhay Aquino administration. Thank you for issuing those pagcor licenses.  Thank you for also not passing the stupid Senate Gaming bill.  🙂

Breakout nation -Philippines!

And I’m not talking my books 🙂

-Faceless Trader

Advertisements

About Abc

Abcdefghijklmnopqrstuvwxyz
This entry was posted in A Little Common Cents Corner. Bookmark the permalink.

4 Responses to July 8, 2012- Stacking up my chips and cards , rolling the dice with Philippines’ casino tycoons! (Casino Industry Overview)

  1. shoyu says:

    go FT! … congrats on ur 7 😉 .. tnx tnx alot – shoyu … p.s. i still owe u a book 🙂

    Like

  2. AiDz says:

    nice article madam, Philippine casinos will beat Singapore’s and Macau’s for sure! can’t wait for 2016! 😀

    Like

    • 2013 opened na sila. You don’t have to wait till 2016! 2013 opening ng BLOOM and 2014 opening ng Belle Grande. 2014 rin i think ung new Resorts World Bayshore complex 😀

      -FT

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s