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# 2011 EPS calculations for Asia Entertainment (AERL)

May 04, 2011 5:20 PM ETLINU-OLD
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2011 net income guidance is \$62-68M.

Q1 RCT total is \$4.072B.

Translating to \$16,288,000 in net income for Q1. (NI is 0.040% of RCT.)

With no growth in RCT for the year that is \$65,152,000 in net income (\$16.288M x 4 quarters)

We know cage capital grows each month and that business in Macau continues to grow. So my assumption is they will pick up another \$3M in NI organically over the last 9 months and hit the high end of guidance making my baseline net income \$68M for 2011.

Based on management's comments relating to the new Galaxy room lets assume they start with 8 tables and get to 12 fairly quickly. So I'll use 10 as the average for the 7.5 months they'll operate the new room in 2011.

Using very round numbers, 10 tables is roughly 40% of the current table count. Lets use \$5.5M as the baseline monthly net income number (\$68M divided by 12 months is \$5.6M, slightly higher than what I'll use to calculate with). 40% of \$5.5M is \$2.2M, which I assume they will make from the new room for 7.5 months, so \$2.2M x 7.5 months = \$16.5M.

Add \$16.5M NI to my assumed, baseline full year net income of \$68M and you get \$84.5M in net income for 2011.

From the last CC we know they said the actual OS count at the end of 2011 will be 39M shares, and the weighted count to figure EPS against will be closer to 35M.

For the headline number...\$84.5M NI divided by 35M shares is \$2.41, for a forward p/e of 3.3.

For the number people will focus on....\$84.5M NI divided by 39M shares is \$2.16, for a forward p/e of 3.7.

This for a company with no fraud risk.

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