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Macau Gaming Stocks - May 2008

Macau Gaming Stocks May 2008

If there was a month to have skipped posting the Macau Gaming Stock's numbers, it probably should've been May... or possibly June the way things are currently trending. For whatever reason, I never posted the April chart, even after doing all the labeling and whatnot. Doofus me.

As you can probably tell from looking at the chart... or net worth... investors seemed to be dropping gaming stocks as the U.S. economy continues to get roughed up due to credit market woes and skyrocketing energy costs.

MGM seemed to weather the storm the best, holding steady at still-depressed $50/share for the period despite rumored action by Tracinda to buttress its flagging share price. LVS swooped to a 5% gain mid month, then dropped after Q1 earnings numbers showed severe weakness in their Macau game plan. WYNN lost 8% on the month, even though they posted decent numbers in the U.S. and Macau operations.

On the Hong Kong market, Galaxy Entertainment (0027HK) had slight gains for the month, ShunTak (a Ho family company) announced intentions to offer 20% of the company in a stock offering in late April, sending shares up then down 10% for the month. In late May, ShunTak entered into the agreement to purchase two undeveloped plots of land adjacent to Nam Van Lake, where they plan to build non-gaming residences. eSUN Holdings (majority partner in Macao Studio City) did a kooky stock split in the middle of the month, sending shares plummeting, losing almost 25% of value over the course of May.

Did I miss anything?

Oh yeah, the elephant in the room... MPEL, whose topsy turvy run in May defies description. Despite posting gangbuster numbers for Q1, City of Dreams construction rocketing forth and admission by the big gaming operators that they've essentially had their pants pulled down in public by the MPEL brain trust, they still managed to gain 10% then lose another 20% over the period.

Long term investors seem to have taken back gains (to make up for post IPO drop?) as equally as new investors jumped on the ship, creating an interesting plateau for two weeks, followed by a steady slide towards $12/share, which is now in the $10 range. From what I can gather, the market is concerned about the impact that new junket commission rules will have on MPEL's ability to keep the AMAX and other junket operators filling the tables at Crown.

I believe that this fear is unfounded, and believe that May and June market share and rolling chip volumes will continue to trend upwards. It has been recently reported that Crown Macau is undergoing yet another casino reconfiguration (the second since December 2007) removing all slot machines in order to make room for even more VIP table games.

It sure has been a bizarre month in the finance world, between the U.S. economy, seemingly never-ending Presidential contests causing unease and skyrocketing energy costs, there are way too many questions in the air than answers. Hardly the atmosphere in which consumer or investor confidence can thrive.

I know we've got a lot of readers who are big investors in gaming companies as well as employees over there... what is your opinion on what's going on in the gaming sector? How do you see the U.S. economy affecting global gaming operations in the near to long term?

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Comments & Discussion:

Wow. Removing all the slot machines? Interesting...

I don't know if you might find it of relevance, but in the batch of photos I sent you Chuck, I also included a few on the guide map of inside the Crown Macau which shows you all the AMAX junkets and where their rooms are located within the Crown Macau building. I thought you would post these images but I think you have decided not to. But seeing as the you have discussed a bit about the reconfiguration of Crown Macau, I thought these photos might also be of interest.

No slot machines, haha.

What's a casino without all of the flashing lights and loud ding..ding..ding...ding..dings. Pretty soon they'll be saying no more hookers allowed.

Do u have a link to the article that said they are getting rid of all of the slots, I missed that memo.

@macauman - It was a small blurb buried in a larger piece related to the G2E Asia conference a week ago. They've removed more machines, possibly not all. I'll follow up the next time I do a call with MPEL. I don't have the link anymore and had to dump my history while dealing with an errant css file just the other day.

@jcdarosa I've looked at those photos, but I felt that what was in there seemed a bit more esoteric than what most folks need to know. I'll post them anyway with the descriptions you sent me. Thanks for the poke!

🔗 

That's a link to an article on Reuters about MPEL replacing their slot machines with more tables.

Macau Gaming Stocks -June

In the toilet.

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