Seeking Alpha

Jim Trippon's  Instablog

Jim Trippon
Send Message
Jim Trippon is an Amazon.com bestselling business and finance author, a practicing CPA, and a fee based investment advisor. His portfolio of companies includes J.M. Trippon & Company CPA, Trippon Wealth Management & Trippon Financial Publishing. Jim has dedicated his business career to... More
My company:
Trippon Financial Research, Inc.
My blog:
Global Profit$ Alert
My book:
Stay Rich Forever: Retirement Planning Secrets of Millionaires and How They Can Work For You!
  • Vegas Caught in Sand Trap. Follow Lady Luck East 0 comments
    Mar 10, 2011 8:48 AM | about stocks: LVS, MGM, WYNN, MPEL
    Lady luck has moved away. No longer happy in Las Vegas, she has packed up her chips and taken up permanent residence in Macau. After all, that is where the profits are.

    The latest numbers from Macau indicate an ongoing revenue boom there. And this is one boom with no end in sight.

    Casino revenue in Macau rose 48 per cent in February compared to the year before. That's a huge jump by any standard. It's even more impressive considering the lower number of gambling days in 2011 due to the timing of the Lunar New Year.

    By comparison, Nevada has rolled snake-eyes. Gambling on the Las Vegas Strip, the city's main tourist district, was up just 4.1% for the year as a whole. Revenues dropped nearly 10% in each of the past two years.

    But that's no reason to avoid investments in some of the biggest casino names in Vegas. Wynn and Las Vegas Sands have expanded aggressively into Macau – a move that has put them in the right place at the right time.

    Macau is now the world's largest casino hub. Casino gambling revenues in Macau, the only place in China where gambling is legal, rose 58 per cent to 188.3 billion patacas last year. A former Portuguese colony, Macau still uses patacas as its currency.

    In U.S. dollar terms, Macau's gaming revenues topped $23.4 billion for the year. That's more than four times the $5.62 billion raked in on the Las Vegas Strip.

    It gets worse on this side of the Pacific. Casino operators don't even like to talk about America's forlorn east-coast gaming hub, Atlantic City. Gambling kingpin Boyd Gaming recently reported that its fourth-quarter revenues of $551.9 million rose 43.4 percent from 2009. But those numbers rose only because the revenues from Borgata in Atlantic City were not formally included. With Borgata included, total revenues actually declined 1.5 percent.

    Even the giant Caesars Entertainment reported a loss for the fourth quarter as Atlantic City revenue declines dragged down the firm's overall performance.

    Picking Casinos On A Roll

    The best performing casinos are those with a stake or headquarters in Macau. Only six casino operators are licensed in Macau. Two of them are traded in Hong Kong and are illiquid pink sheets in the U.S.: Galaxy Entertainment Group, and SJM Holdings, a part of the legendary Ho family's empire.

    The big four traded on U.S. exchanges are Las Vegas Sands (NYSE:LVS), MGM Resorts International (NYSE:MGM), Wynn Resorts (NASDAQ:WYNN) and Melco Crown (NASDAQ:MPEL) which has Australian roots.

    Las Vegas Sands shares have performed strongly over the past year but have fallen back on reports that the company is under investigation by the SEC.

    Wynn Resorts' Las Vegas revenues grew 8% and profits grew 25% in the quarter ended Dec. 30 compared the same period last year.

    Wynn Resorts One-Year Performance

    vegas,macau,casino,las vegas,chinese economy,china economy,china stocks,chinese stocks,china stock,china stock digest,global profits alert,jim trippon

    Wynn's one year share performance is shows a gain of more than 100 percent in both the U.S. listing and the Hong Kong listed company, Wynn Macau.

    MGM Resorts International One-Year Performance

    vegas,macau,casino,las vegas,chinese economy,china economy,china stocks,chinese stocks,china stock,china stock digest,global profits alert,jim trippon

    MGM may be underperforming due to relatively a smaller Macau exposure. The company reported a fourth-quarter loss despite half-a-billion dollars in cost-cutting.

    Melco Crown recently reported a 93 percent increase in fourth quarter revenues.

    Melco Crown One-Year Performance

    vegas,macau,casino,las vegas,chinese economy,china economy,china stocks,chinese stocks,china stock,china stock digest,global profits alert,jim trippon

    Melco Shares are up 68 percent for the year. The firm has struggled to emerge into profitability due to lavish construction efforts and corresponding debt loads.

    Predicting the Next Roll of the Dice

    Las Vegas has a long way to go before it can get out of its current quagmire. Although revenues are increasing, the city is burdened by a heavy load of new hotel rooms. Thousands of new rooms became available just as the financial crisis hit.

    More rooms are still being completed in Las Vegas, coming into competition with existing casino bed space. The possibility of fuel price hikes could crimp summer airline traffic. Gamblers may also choose to try their luck at casinos closer to their home cities.

    Not surprisingly, predictions for Macau's casinos continue to be upbeat. As the Chinese population gets richer, demand for gaming continues to rise. Although the city's infrastructure is strained, China's famous bullet trains may soon be arriving in the gambling enclave.

    For those who have no problems with limited competition, Chinese authorities seem unwilling to extend new gambling licenses to anyone beyond the six existing operators.

    The message to gaming investors is simple. Go where the money is. American-listed casino companies need Macau exposure to grow revenues while Las Vegas attempts to recover.

    It's worth noting in conclusion that Wynn is counting on a rare opportunity to expand in Macau. The company is building a new report in the Cotai section of Macau and has assured investors that officials will approve the new property, giving his investors a new avenue of growth of in the world's biggest gambling Mecca.

    Click HERE to know more about the China Stock Digest: China Stock Market Research & China Stock Analysis
    Secrets of the 30-Year China Stock Market Super-Cycle: Here's How To Get Your Share...

    We've been in a global "Super-Cycle" for 10 years now.

    It's true. There's no denying it.

    Well... maybe not here in the United States. But certainly in emerging markets like China and India.

    The growth in the next 25 – 30 years in those two countries is almost too big to fathom.

    Hundreds of new millionaires will be made... and dozens of billionaires. Think about the enormous wealth created in the American Industrial Revolution... times 11.

    But you still have to know the best places to invest your hard-earned cash... even in the fastest-growing economies on the planet.

    We're already one third of the way into the investment boom of the century.

    Let us be your "Investor Sherpa" guide into this once-in-a-generation phenomenon.

    For full details, hit the link below:

    YES! I Don't Want To Miss Out On This Investment Opportunity Of My Lifetime! Show Me Where To Put My Money For Maximum Appreciation!


    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com.

Back To Jim Trippon's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.