posted
WYNN has two casinos. One in Las Vegas and one in Macau.
WYNN has $1.451 billion paid in capital and $1.8 billion debt.
MPEL has $1.1 billion paid in capital and will have $1.8-2.0 billion debt for two casinos in Macau by next year. One to open in April and one under construction to open next year.
Macau has better drop on gaming tables then Las Vegas. Three to seven times better.
MPEL has future plans to develop a third casino in Macau.
WYNN has a market cap of $11.5 billion and MPEL has a market cap of $7.4 billion.
Macau casinos will have better drops and margins, and over the next 2 to 2 1/2 years MPEL will have three casinos there.
WYNN and MPEL With two casinos each, MPEL will be worth in excess of the $11.5 billion WYNN. With MPEL at three casinos it will be worth in excess of $20 billion.
Analyst currently have WYNN targeted to increase market cap to $13.2+ billion.
MPEL STOCK PRICE correlation to WYNN valuation:
MPEL will be at $35+ by end of year and $56++ when the third casino opens.
LVS valuation correlation to STOCK PRICE would more then double those stock price numbers. (WYNN PE is 17, industry average is 37).
If MPEL goes to the industry average it would be stock price of 70+ by end of year and 112+ when the third casino opens.
Entry level price for MPEL. The train has not left the station, get on board. This is WYNN price ride all over again.
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Asian Gaming Stocks Overtake Sands on New Casinos (Update1)
By Robert Fenner
Feb. 2 (Bloomberg) -- Asian gaming stocks, industry laggards last year, are setting records as investors bet on new casino projects in Macau and Singapore.
Shares of Malaysia's Genting Bhd., the builder of Singapore's second casino, and Australia's Aristocrat Leisure Ltd., the world's second-largest slot-machine maker, are each up more than 40 percent in the past 12 months.
Even after their gains, Asian casino stocks are less expensive relative to earnings, on average, than are such U.S. gambling companies as Las Vegas Sands Corp. and MGM Mirage. They are set to catch up, said Charles Norton, who manages the $70 million Vice Fund in Addison, Texas.
``One of the reasons why we like the gaming sector as much as we do is just Asia,'' Norton said. The fund buys alcohol, tobacco and firearms stocks along with gaming companies. ``It's an enormous driver.''
He holds shares of Melco PBL Entertainment (Macau) Ltd., a partnership between Australia's Publishing & Broadcasting Ltd. and Melco International Development Ltd. that is building Macau casinos.
The eight gaming stocks in the Morgan Stanley Capital International Asia-Pacific Index had an average increase of 21 percent last year. The USA Index, composed of six gaming stocks, posted an average gain of 57 percent last year.
Still Cheap
Macau, the former Portuguese enclave that reverted to Chinese control in 1999, passed the Las Vegas Strip as the world's biggest gambling market in 2006. Genting last month said it planned to build a casino in Macau. The 28-square-kilometer (11-square-mile) area is the only place in the world's most populous nation that allows gambling on games of chance.
U.S. gaming shares benefited last year from Asia casinos. Las Vegas operator Steve Wynn, MGM Mirage's Kirk Kerkorian and Las Vegas Sands' Sheldon Adelson capitalized early on the demand in Macau. American companies began opening gambling houses after Hong Kong billionaire Stanley Ho in 2004 lost his four-decade monopoly to operate casinos in Macau.
The 10 biggest gaming companies in Asia by market value sell on average for 19.4 times earnings. The 10 largest U.S. casino owners trade at an average of 34.9 times earnings, excluding Wynn's Wynn Resorts Ltd. Its value is 5,395 times because the five-year old company was not profitable until 2006. Wynn Resorts will open a $1.2 billion Macau casino this year.
Too Many Casinos?
Macau's gaming regulator said Jan. 23 that revenue surged to 55.9 billion patacas ($6.95 billion) in 2006, a 22 percent gain on the year earlier. In the U.S., Nevada has yet to release full- year figures for Las Vegas's revenue. Morgan Stanley estimates the Las Vegas strip's 2006 gaming revenue at $6.5 billion.
The possibility that China might relax gambling restrictions elsewhere in the country could hurt the industry, said Matt Hoult at ABN Amro Asset Management. Other risks include rising costs for building and maintaining the casinos and competition among operators opening new venues.
``It's a bit like the tech boom in that everyone says they've got these fantastic earnings coming through so let's get exposed to it,'' said Hoult, who helps manage the equivalent of $4.1 billion at ABN Amro Asset Management in Sydney and holds less gaming stocks than are represented in benchmarks. ``But the supply of gambling facilities may be far in excess of what it's capable of supporting in five to 10 years time.''
Price and Earnings
Genting, Asia's biggest casino operator, is valued at 19.9 times earnings, while Las Vegas Sands, the world's biggest casino operator by value, trades at 75 times. Las Vegas Sands runs Sands Macau, the world's biggest casino when ranked by the number of tables.
Publishing & Broadcasting, Australia's biggest media company by market value, trades at 21.9 times earnings. The Sydney-based company, which now gets 55 percent of its revenue from gaming investments, is a partner in Melco PBL with Ho's son. Melco PBL raised $1.14 billion in a share sale in December.
MGM Mirage, the world's second-largest casino company by market capitalization, is valued at 34.8 times earnings. The Las Vegas-based company is building a $1.6 billion resort in Macau due to open at the end of this year.
The next gambling venue that will open up is Singapore. Genting, based in Kuala Lumpur, jumped 54 percent last year and led gains in Asian gaming stocks.
Billionaire's Bet
The company, controlled by billionaire Lim Kok Thay, won a second Singapore casino license in December, joining Las Vegas Sands as the only operators in the city for at least a decade. Lim forecast the S$5.2 billion ($3.4 billion) project, which will open by 2010, will pay for itself in seven years.
Investors will be willing to pay higher price-earnings multiples for Asian casino shares because of the companies' improved growth prospects, said Ross MacMillan, an analyst at stockbroker E.L.&C. Baillieu in Sydney.
``We will see a market re-rating of these gaming stocks, particularly as they start to expand their operations overseas such as in Macau,'' he said. ``We will see catch up to the multiples that U.S. gaming stocks trade at.''
It won't be just casino operators that will benefit from growth in Asia. Sydney-based Aristocrat, the world's second- largest slot-machine maker, which gets 75 percent of earnings from outside Australia, produced 45 percent of the 4,650 slot- machines installed in Macau from zero sales three years ago, according to Steve Wheen, an analyst at Macquarie Bank Ltd.
With Aristocrat already supplying more than half the machines used by Las Vegas Sands and Wynn in the former colony, Macquarie expects the company will have about 55 percent of a 37,680 slot-machine market by the end of 2012.
``Aristocrat is beautifully placed to be able to deliver product into that market and PBL's strategic position in Macau, with all its growth potential, make the stocks very attractive,'' said John Grace, who holds shares in both companies among the $6.9 billion he helps manage at Ausbil Dexia Ltd. ``Those with exposure to higher growth markets such as Asia will do better.''
To contact the reporter on this story: Robert Fenner in Sydney rfenner*bloomberg.net
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