The last full week of June was quite a mixed bag for the gambling industry. Penn National Gaming Inc. PENN and Melco Crown Entertainment Limited MPEL were busy enhancing their portfolio. While Penn National announced the opening of Plainridge Park Casino in Massachusetts, Melco Crown updated its guests on the First Figure-8 Ferris Wheel at its upcoming Studio City complex in Macau.
On the other hand, it seems that there is no respite for Macau in the near term with revenues expected to fall for the month of June, thereby raising concerns for companies like Wynn Resorts Ltd. WYNN, Las Vegas Sands Corp. LVS, Melco Crown and MGM Resorts International MGM. Meanwhile, Caesars Entertainment Corp. CZR continues to struggle with lawsuits. (Read earlier development: Gambling Stock Round Up for Jun 15, 2015).
Recap of the Week’s Important Stories:
1. Last week, Penn National Gaming opened the Plainridge Park Casino in Massachusetts – the first entertainment and gaming facility in the state. Located at 301 Washington Street, about 35 miles southwest of Boston and 18 miles north of Providence, RI, Plainridge Park Casino will be open 24 hours, 7 days a week. This $250.0 million property features 1,250 slot machines, video poker and virtual table games, simulcast racing, live music as well as upscale casual dining opportunities.
2. Melco Crown unveiled the Golden Reel Ferris wheel, which is nearing completion at its $3.2 billion Studio City complex in Macau and is set to open in 2016. Towering at 130 meters in Cotai, the Golden Reel is located at the center-point between the resort's twin "Art Deco meets Gotham City" hotel towers. The ride is expected to offer visitors a thrilling experience. There are 17 "Steampunk"-themed cabins that can accommodate up to 10 people for approximately a 15 minute journey around the figure-8 track.
Studio City is situated in the heart of Cotai and is adjacent to the Lotus Bridge Immigration Point. It is directly connected to the light rail system. Besides offering entertainment options, the complex will offer an array of accommodation, regional and international dining, designer brand shopping as well as a spacious and contemporary casino.
3. In one other development, analyst at Wells Fargo reportedly predicted a decline in Macau revenues for the month of June in the range of 30% to 40% to approximately $2 billion – the lowest in any month in more than four years. Meanwhile, Nomura Equity Research expects a decline of 34% for the same month. Analysts continue to predict declines despite expectations that a recovery in Macau casinos could begin this year.
Macau gambling revenues have been downhill since Jun 2014 due to the nationwide crackdown on corruption in China. This has compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau. Consequently, it has lowered footfall at the local casinos. Meanwhile, a cooling Chinese economy, tighter visa policies, political unrest and a smoking ban on mass market gaming floors have compounded woes.
4. Recently, Caesars Entertainment was reportedly sued by UMB Bank – the trustee for senior bondholders – for $6.0 billion for shuffling its assets. The lawsuit says that the company’s entities shifted good assets away from creditors to benefit its owners. This is the latest lawsuit faced by the company among various others. However, it is for the first time that the complaint has been made by a group of bondholders who support the restructuring and the casino operator's plan to fix its $18 billion debt.
In response, Caesars Entertainment stated that UMB's claim that the company is obligated to guarantee the first lien notes lacks merit. Meanwhile, the company has confirmed at the request of certain first lien creditors, who are party to the Restructuring Support Agreement ("RSA"), that the filing of the UMB Bank lawsuit does not violate the RSA and therefore it remains in force.
Share Price Performance
Last week, share price of most of the companies fell with the highest decline coming from Wynn Resorts of 4.4%, followed by a 3.9% decline at Melco Crown. However, share price of Boyd Gaming Corp. BYD increased 0.5%.
Over the last six months, share price of most of the gambling stocks lost value with Caesars Entertainment experiencing a decline of 59%, followed by Wynn Resorts that experienced a decline of approximately 35%. However, Boyd Gaming gained over the same time frame.
|
Company |
Last Week |
Last 6 months |
|
WYNN |
-4.4% |
-34.9% |
|
LVS |
-3.1% |
-10% |
|
MGM |
-3.7% |
-12.9% |
|
MPEL |
-3.9% |
-25.5% |
|
CACQ |
-3.2% |
-28.8% |
|
BYD |
0.5% |
23.6% |
|
CZR |
-2.8% |
-59% |
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 this volatile movement to continue in the coming days as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment