Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Melco International Development / Event-Driven

<ul>
<li>Both <a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco International Development (200 HK)</a> and <a href="https://www.smartkarma.com/entities/melco-crown-entertainme-adr" target="_blank" data-smartkarma-citation="entities:810:1" rel="noopener">Melco Resorts &amp; Entertainment (MLCO US)</a> have underperformed peers. But Melco is unjustifiably "outperforming" MLCO.</li>
<li>Preceding my comments on Melco, are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Both Melco International Development (200 HK) and Melco Resorts &amp; Entertainment (MLCO US) have underperformed peers. But Melco is unjustifiably "outperforming" MLCO.
Preceding my comments on Melco, are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Melco Trading Rich As Lawrence Adds To His Position

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>Unsurprisingly, the independent expert (IE) considers <a href="https://www.smartkarma.com/entities/crown-resorts-ltd" target="_blank" data-smartkarma-citation="entities:808:1" rel="noopener">Crown Resorts (CWN AU)</a>'s A$13.10 offer from <a href="https://www.smartkarma.com/entities/blackstone-group-inc" target="_blank" data-smartkarma-citation="entities:27166:1" rel="noopener">Blackstone Group (BX US)</a> to be fair and reasonable. We think that IE’s valuation approach is sound.  </li>
<li>The key condition is approval from shareholders and gaming regulatory authorities. The scheme meeting is scheduled for 29 April. </li>
<li>We continue to think that offer is attractive. At the last close price and for the 12 May implementation date, the gross and annualised spread is 2.7% and 27.1%, respectively.</li>
</ul>


Unsurprisingly, the independent expert (IE) considers Crown Resorts (CWN AU)'s A$13.10 offer from Blackstone Group (BX US) to be fair and reasonable. We think that IE’s valuation approach is sound.  
The key condition is approval from shareholders and gaming regulatory authorities. The scheme meeting is scheduled for 29 April. 
We continue to think that offer is attractive. At the last close price and for the 12 May implementation date, the gross and annualised spread is 2.7% and 27.1%, respectively.


Crown Resorts Scheme Meeting on 29 April, IE Opinion

<ul>
<li>The <a href="https://www.parliament.wa.gov.au/publications/tabledpapers.nsf/displaypaper/4111048a8d7a626ef0a339594825880f00079102/%24file/pcrc+final+report+digital.pdf" target="_blank" rel="noopener">Perth commission report</a> found <a href="https://www.smartkarma.com/entities/crown-resorts-ltd" target="_blank" data-smartkarma-citation="entities:808:1" rel="noopener">Crown Resorts (CWN AU)</a> not suitable to operate Crown Perth but did not call for the gaming licence to be revoked.</li>
<li>The key conditions precedent for the Blackstone deal are shareholder, gaming regulatory and FIRB approval. The scheme meeting is targeted to be held before the end of June 2022.</li>
<li>At the last close price of A$12.58, the gross and annualised spread for a 30 June implementation is 4.1% and 16.94%, respectively. </li>
</ul>


The Perth commission report found Crown Resorts (CWN AU) not suitable to operate Crown Perth but did not call for the gaming licence to be revoked.
The key conditions precedent for the Blackstone deal are shareholder, gaming regulatory and FIRB approval. The scheme meeting is targeted to be held before the end of June 2022.
At the last close price of A$12.58, the gross and annualised spread for a 30 June implementation is 4.1% and 16.94%, respectively. 


Crown Resorts' Offer Spread Risk/Reward - The Perth Commission Report

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Sands China's FY 2021 results were acceptable in our view, albeit still poor relative to the pre-pandemic levels. The company's cash flows have improved substantially from FY 2020. We expect Sands China to ease the operating cash burn in FY 2022 and commence mild deleveraging in FY 2023. This is because the company is poised to complete development works on The Londoner Macao in FY 2022 and would have little expansionary capex plans from FY 2023. That said, it would take 1-2 years for Sands China to use net OCF for debt reduction, assuming the company does not pay any dividends in the meantime. As a result, Sands China is unlikely to regain its pre-pandemic leverage metrics until 2024/2025 at the earliest.

 Sands China's FY 2021 results were acceptable in our view, albeit still poor relative to the pre-pandemic levels. The company's cash flows have improved substantially from FY 2020. We expect Sands China to ease the operating cash burn in FY 2022 and commence mild deleveraging in FY 2023. This is because the company is poised to complete development works on The Londoner Macao in FY 2022 and would have little expansionary capex plans from FY 2023.  That said, it would take 1-2 years for Sands China to use net OCF for debt reduction, assuming the company does not pay any dividends in the meantime. As a result, Sands China is unlikely to regain its pre-pandemic leverage metrics until 2024/2025 at the earliest.

Sands China - Earnings Flash - FY 2021 Results - Lucror Analytics

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>Exposure in the Casinos &amp; Gaming industry has fallen to new lows, with just 28% of active GEM managers now invested.</li>
<li>Declines in ownership have been spread over 7 years, but the last 6-months has seen the exodus gather pace, with 6.5% of EM investors closing out exposure over the period.</li>
<li>With changing attitudes to ESG and the perceived social negatives of gambling, active managers are getting more and more comfortable leaving gaming stocks out of their portfolios.</li>
</ul>


Exposure in the Casinos &amp; Gaming industry has fallen to new lows, with just 28% of active GEM managers now invested.
Declines in ownership have been spread over 7 years, but the last 6-months has seen the exodus gather pace, with 6.5% of EM investors closing out exposure over the period.
With changing attitudes to ESG and the perceived social negatives of gambling, active managers are getting more and more comfortable leaving gaming stocks out of their portfolios.


Hong Kong

Sands China Ltd. develops, owns, and operates integrated resorts, retail malls, and casinos. The Company also manages convention and exhibition halls in Macau.

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Sands China (1928 HK)

StubWorld: Melco Trading Rich As Lawrence Adds To His Position

I'd be inclined to reverse the stub here - Short Melco International and Long Melco Resorts. The current level appears unsustainable.

David Blennerhassett

Crown Resorts Scheme Meeting on 29 April, IE Opinion

The key condition is approval from shareholders and gaming regulatory authorities. Scheme meeting is on 29 April. At the last close and for the 12...

Arun George

Crown Resorts' Offer Spread Risk/Reward - The Perth Commission Report

We believe that the Perth commission Report is a positive outcome for the Blackstone offer. At the last close, the gross and annualised spread for...

Arun George

Sands China - Earnings Flash - FY 2021 Results - Lucror Analytics

Sands China's FY 2021 results were acceptable in our view, albeit still poor relative to the pre-pandemic levels. The company's cash flows have...

Lucror Analytics

Casinos & Gaming: Bailing Out

With changing attitudes to ESG and the perceived social negatives of gambling, active managers are getting more and more comfortable leaving gaming...

Steven Holden

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