Friday, October 30, 2009


• Rob Goldstein, a Sands executive vice president in charge of operating its Las Vegas properties, said the company was gradually increasing its room rates and trying to avoid price cuts generally made to keep rooms filled.
• Rooms cost more than $170 on average during the quarter at the Venetian and Palazzo, though slightly more at the Palazzo. The rooms were just under 90 percent occupied for the quarte
• ... rates for leisure travel are also beginning to firm, particularly on the weekends. (obviously at some point supply finds demand - market discovery... hard to believe that still exists in America with what we see on a daily basis from our government and central bank)
• The company said it is continuing to cut costs but already has made 90 percent of the cuts it plans; in all, the cuts are to save the company $500 million per year.
And the elephant in the room...
• Sands also is working to lower its $11.76 billion in debt as of Sept. 30 by raising capital, selling noncore assets and cutting costs at its resorts.

Las Vegas Sands (LVS) Earnings "Ok" but CEO Talk Supports Stock; Hong Kong IPO Approved Part I

Las Vegas Sands (LVS) is our one truly speculative fare in the portfolio - after sitting on the precipice of potential default banks swooped in [Apr 22, 2009: Wynn Resorts, Las Vegas Sands Amend Credit Terms] and helped both LVS and MGM Mirage (MGM) live despite yawning debt loads. Las Vegas casinos was actually a group I was targeting 2 years ago as one of our canary in the coal mines when CNBC pundits and government officials were denying a recession was possible - while we were saying the house ATM driven, conspicuous consumption era was about to hit the wall. [Oct 3, 2007: A Top in Casino Names? Wynn and Las Vegas Sands] Unfortunately at that time we could not short individual equities so we could only watch from afar as many of these names fell 90%+ versus October 07.
But now it's a new day and almost every large corporation is deemed too big to fail. (Small business? No one cares about you) So we have to invest with the central planning commission government; amazingly banks who themselves were on the cliff of failing found it in their hearts to adjust loan terms to keep these big casinos alive. [Sep 3, 2009: Las Vegas Sands - Too Big to Fail?] At this point we only have about a 1% exposure in LVS since the day to day volatility is immense and the stock temporarily broke support. This is not really a name you can have very good risk controls over since the daily fluctuations will ruin almost any strategy. The chart is a bit misleading because after yesterday's 12% gains, the stock added quite a bit more in after hours once earnings came out mostly on the back of CEO Sheldon Adelson's comments about "bottoming" business activity. The fact that CEO phrases like this are still moving stocks 10% at a time is... well, says a lot about the market nowadays. The stock is in the mid $16s in the after hours session.
Effectively owning Las Vegas Sands is almost like a long dated call option; unlike MGM which is opening its huge project in America (City Center), LVS's future lies in Asia both with a Macau property and a new casino in Singapore. All things being equal (MGM actually has even more debt than LVS) I'd rather place my chips (pun intended) with the company whose future prospects lean to Asia. On that note we have word overnight that LVS has received approval to list its Macau unit in Hong Kong - should help them raise a ton of cash.
• Las Vegas Sands (LVS) and China's Minsheng Banking Corp have won approval from the Hong Kong stock exchange for more than $6 billion in combined initial public offerings, sources said on Friday, as the companies try to cash in on an IPO window that may be slowly shutting.
• Las Vegas Sands plans to raise $2 to $3 billion by listing the gaming company's Macau unit on the Hong Kong exchange, sources said. Sands will kick off pre-marketing next week and start its marketing roadshow on Nov. 9, with a trading debut set for the end of November, according to sources with direct knowledge of the deal.
• The gaming and casino company run by Sheldon Adelson has struggled with a heavy debt load, and is looking to seize on an opportunity to have a publicly traded division in Hong Kong at a time when the IPO window is still open.
• Casino operator Las Vegas Sands Corp. on Thursday reported a larger third-quarter loss as gambling markets continued to struggle, taxes increased and the company pressed ahead on developing a resort in Singapore.
• The Las Vegas-based company led by billionaire Sheldon Adelson benefited from more gamblers visiting Macau, the Chinese gambling enclave, but was hurt in its home market of Las Vegaswhere bettors have stayed away from tables and rooms have been less profitable.
• Las Vegas Sands posted a loss of $123 million, or 19 cents per share, for the three months ended Sept. 30. It said those results were hurt by increased income tax expenses, which cost the company $73.7 million. The results compared with a loss of $32.2 million, or 9 cents per share, a year earlier.
But as our readers know, to make the stock market cheap, we have to ignore many "expenses" since apparently they are imaginary. So a 19 cent loss turns into a 3 cent gain, presto magic
• The company said its adjusted income -- which does not include many one-time items including the taxes, interest expenses or stock dividends -- totaled $20.1 million, a profit of 3 cents per share. That beat analyst expectations for losses of one penny per share, according to a Thomson Reuters poll.
• Its revenue rose 3 percent to $1.14 billion from $1.11 billion during the same quarter last year, but came in slightly shy of analysts' $1.17 billion estimate.

The Las Vegas exposure continues to suck wind...
• New casinos in Bethlehem, Pa., and Macau helped the company grow its overall gambling revenue more than $100 million to $908 million. But casino revenue at its Venetian and Palazzo resorts on the Las Vegas Strip fell to $99 million from $113.2 million a year earlier.
• Sands' revenue fell in food and beverage, hotel rooms and retail, while the company's overall expenses rose slightly.
• "It looks like they exceeded expectations in Macau, but they got destroyed in Las Vegas," said Susquehanna Financial analyst Robert LaFleur.

But never mind the numbers, the CEO provides happy talk and we can bid up the stock...

• Adelson told investors he was seeing strong signs that bad times might be turning around in Las Vegas because of a return of convention business and group bookings.
• "Just like night follows day and day follows night, there are peaks and valleys throughout the economic cycle and virtually everything in life," Adelson said. "There is no doubt whatsoever that the economy is returning and will return."

Who knew? Sheldon's a philosopher to boot....

Not as much "green shootery" coming from his peers...

• Several large Las Vegas-based casino companies have reported this week that they are struggling as consumers remain conservative in their spending, especially on leisure and gambling.

CIT Group (CIT) Falls As Bankruptcy Filing Seems Likely

CIT Group, Inc. (NYSE: CIT) is trading 17 percent lower in early action as a bankruptcy filing is seen likely for the small and mid-size business lender.

The company has been exploring a voluntary debt exchange and a prepackaged bankruptcy with bondholders. The voluntary debt exchange is unlikely to happen, leaving bankruptcy as the likely option.

This morning, CIT has reached an agreement to amend its $3 billion securities-based financing facility with Goldman Sachs International. Pursuant to the amendment, the commitment amount of the GSI Facility has been reduced to $2.125 billion, effectively eliminating the currently unused portion of the facility, and CFL has agreed to post additional collateral to secure amounts due to GSI under the GSI Facility

Thursday, October 29, 2009

This Pullback is Buy Opportunity—Not Correction

This Pullback is Buy Opportunity—Not Correction: Strategists

Stocks fell last week and have continued to slide this week, prompting speculation that this may be the beginning of a correction. What does this mean for the overall markets going forward?

Adam Bold, founder and CEO of the Mutual Fund Store and Joe Kinahan, chief derivatives strategist at Thinkorswim, shared their insights.

"This is really a healthy thing to have happen in the market," Bold told CNBC.

"It introduces some fear back into the markets, which is not a bad thing, and it gives people who have been waiting for an opportunity to get in that opportunity."

Bold said there's still US$4 trillion on the sidelines and there's still "a lot of opportunity" going forward.

Regional Morning Notes UOB Kayhian - Finance Sector (Maybank)


MAXIS (TP RM5.30-5.80– SUBSCRIBE) Initial Public Offering: The Return of the Jedi

We value Maxis, Malaysia’s largest mobile operator, at an equity value of RM39.8bn-RM43.5bn, implying a fair value of RM5.30-RM5.80/share. The valuation translates into 14.8x-16.2x CY10 EPS, and is supported by our DCF valuation of RM5.80 (WACC: 9%,TG: 1.5%). Investors are advised to subscribe to the offer in view of Maxis’ strong fundamental execution, superior EBITDA margin and robust prospective dividends going forward. Institutional investors would have strategic exposure to an index-linked heavyweight with a sound liquidity profile. While deprived of the longer term growth story with the overseas assets hived off, Maxis is a core holding for exposure to Malaysia’s mobile telecoms.
(Source: OSK)

Tuesday, October 27, 2009

US Daylight saving time

US Daylight saving time is going to start on 1st Nov 2009, hence the US market will start the trading at 10.30pm(Local Time) by then.

Morgan Stanley Global Research Upgrades Malaysia

The influential Morgan Stanley Research has upgraded Malaysia and Egypt last week in the much followed Asia Strategy Report. Below are excerpts from the report:

Key changes in our country quant model this month are:

Upgrading: Malaysia and Egypt from equal-weight to overweight;

Downgrading: Peru and Chile from equal-weight to underweight.

Overweight countries are: China, Brazil, Taiwan, India, Israel, Poland, Malaysia and Egypt;

Underweight countries are:

Strong points for Malaysia in our model include a #1 currency ranking and #4 business cycle ranking. Relative P/Book has fallen to 1.0x due to recent under performance. Malaysia also gains in our model ranking this month, moving from #8 to #6. Strong points for Malaysia in our model include a #1 currency ranking (a combination of fundamental upside and a stock market consisting mainly of domestic demand, Malaysia ringgit earning stocks).

Malaysia ringgit is making steady progress against the US dollar.We also rank Malaysia’s business cycle score in the top quartile of EM countries in the model. Exports seem set to

trend up strongly from here, and Malaysia is one of the EM countries most geared to a recovery in global trade and commodity prices.

Due to recent under performance, the P/BR relative of MSCI Malaysia to the EM benchmark (now 1.0x) has fallen significantly. Malaysia is one of the least technically overbought markets in the asset class, ranking #5 on this metric. Moreover, the median GEM fund is running a significant underweight of 132 bps versus the benchmark, substantially higher than the average for the last five years.

Regional Morning Notes (UOB Kayhian)

Is the U.S. alone in this recovery?

Thought of the Week

Next week, the Bureau of Economic Analysis will publish a preliminary forecast of third-quarter U.S. GDP, which is estimated to show an encouraging bounceback of 3 - 4% growth. However, it's important to realize that we're not alone in the recovery. This week's chart shows that China (as well as the Asia region as a whole) has already experienced its bounceback in growth, which is now returning to more normal levels. While the global rebound will not be perfectly in sync, global growth as a whole seems to be finally picking up, which should prove to be both a boost for U.S. expansion via increased exports as well as a significant tailwind for international stocks in coming years.

Local funds said to be paying RM4.90-RM5 for Maxis

Response to Maxis Bhd's share sale, Malaysia's largest initial public offering (IPO), is said to be tepid thus far, with asking prices said to be near the lower end of the RM4.80 to RM5.50 price range that book-runners are indicating. (Financial Daily)

Monday, October 26, 2009

Genting: Singapore casino opening on track

Genting Berhad is on track for a partial opening of its Singapore casino resort by Christmas, putting it ahead of the competing project by Sheldon Adelson’s ALs Vegas Sands Corp, the Wall Street Journal reported. Gentings official target date for opening its US$4.4bn Resorts World on the island of Sentosa was still early 2010, the newspaper said. (Starbiz)

OSK Research on Malaysia Budget 2010

Trading BUY CALL : ILB (5614) > Current Price RM0.915

ILB (5614) > Current Price RM0.915

Leveraging on its RM0.90 support line, a rebounced is seemingly brewing within Integrated Logistics. This can be reassured by its daily MACD that is already turning bullish. Furthermore, its RSI shows that the counter has decently cooled down and is riped for next wave of rally. With the economy on the mend, expects the logistic sector to pick up soon.

Trading BUY

Target Price 1.20 with minor hiccups @RM1.17. Place relevant stop-loss.

UOB Kayhian On Malaysia Budget 2010

Please download from below link.

Malaysia 2010 Budget: Same bang for limited buck

• Driving the Nation towards a High-Income
• Ensuring Holistic and Sustainable
• Focusing on the Well Being of the Rakyat
Source: 2010 Budget Speech, UOB Kay Hian
Key Initiatives Since Najib Became PM
• Introducing the 1Malaysia Concept,
People First, Performance Now
• Liberalising 27 services sub-sector and the financial sector
• Abolishing the Foreign Investment
Committee guidelines and establishing Ekuiti Nasional Berhad
Source: 2010 Budget Speech
2010 Budget: Construction, Infrastructure RM9b allocation for infrastructure projects, including:
• RM4.7b for road and bridge projects
• RM2.6b for water and sewerage services
• RM899m for rail facilities
• RM820m for ports and sea services
• RM276m for airport project

Sunday, October 25, 2009

MEMS.KL - Sell : A sinking ship !

"MEMS is hurting for cash and is sitting on a mountain of debt, it probably is a sinking ship that not even the most skilled manager can save" - My advice

Have a good trade!