kab60 Posted December 17, 2014 Share Posted December 17, 2014 Is anyone taking a look at these? While not exactly value stocks, most casinos on Macua have dropped almost 50 pct. this year. The main driver is president Xi Jinping and his crackdown on corruption. Basically, Macau is the only place in China where Casinos are allowed (and only 6 operators have licenses, I believe). In a couple of years there'll be a highspeed train that will connect it to the mainland. A company like Galaxy Entertainment Group Ltd has showed crazy growth (like most on Macau), even though it has slowed down this year due to a number of factors; Jinping, world championsship of soccer in the summer, a smoking ban, new visa and credit card rule, demonstrators (rightfully, I'm sure) demanding higher wages etc. Basically, pretty much everything has gone the wrong way for Macau casinos this year which is why I find the valuation interesting at the moment. A company like Galaxy funds a couple of huge news hotels solely with the cashflow from the existing business on Macau, so they know how to generate money. From my understanding, Chinese love to gamble, and corruption or not - I'm pretty sure it'll continue to stay that way. And I like the numbers even though competition will pick up with more hotels underway: 50 pct. revenue growh (3 year) and 122,4 pct. income growth (3 year) for Galaxy. Xi Jinping is visiting Macua these days, and the stocks just took another big hit today. I was just wondering if anyone else was having a look at these stocks at the moment (or have some general input as to why casinos might/might not be intestering to invest in). Link to comment Share on other sites More sharing options...
ScottHall Posted December 17, 2014 Share Posted December 17, 2014 The casinos seem to be glorified money laundering schemes, but if you can live with that (I can), I think some of these look pretty interesting. I've been looking at them myself, but have not bought any yet. Link to comment Share on other sites More sharing options...
kab60 Posted July 8, 2015 Author Share Posted July 8, 2015 Just wanted to bump. It seems like the Chinese meltdown has hit HK and therefor Galaxy as well. I have no position but others might find it worth a look. Other interesting ideas hit by Chinese development? Link to comment Share on other sites More sharing options...
investor-man Posted July 9, 2015 Share Posted July 9, 2015 The Red Corner has some pretty interesting write ups on Future Bright (Macau, but not casinos), and it's getting cheaper and cheaper during this drop. Link to comment Share on other sites More sharing options...
jawn619 Posted July 9, 2015 Share Posted July 9, 2015 296.HK - Emperor Entertainment Hotel Ltd is an another interesting casino in china, trading at 5x net income Link to comment Share on other sites More sharing options...
ScottHall Posted July 9, 2015 Share Posted July 9, 2015 As a follow up to my previous comment, I have yet to buy any of these. It has been interesting watching the gaming revenue statistics come in each month; they're bleeding customers, and the declines, at least so far, are barely decelerating. It'll be interesting to see what happens here. You have to assume the operating leverage on these companies will be significant, so the multiples probably aren't near as low as they look. Still watching. Still interested. Link to comment Share on other sites More sharing options...
silverhawk Posted July 9, 2015 Share Posted July 9, 2015 The operating leverage is significant. 40% of expenses is taxes paid to Macao's government. Were the casino's overearning because of VIPs moving their money out of the country? Yes. Can gross gaming revenue come back? With time, hopefully I hope. Link to comment Share on other sites More sharing options...
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