Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This week in StubWorld ...</p>
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<a href="https://www.smartkarma.com/entities/kwg-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:12601:1" rel="noopener"></a>Reportedly <a href="https://www.smartkarma.com/entities/las-vegas-sands-corp" target="_blank" data-smartkarma-citation="entities:807:1" rel="noopener">Las Vegas Sands (LVS US)</a> is exploring the sale of its Las Vegas hotel-casinos, the result of which would concentrate its gaming portfolio in Macau and Singapore. <br><br><a href="https://www.smartkarma.com/entities/cellnex-telecom-sau" target="_blank" data-smartkarma-citation="entities:21258:1" rel="noopener">Cellnex Telecom Sau (CLNX SM)</a> is understood to be in advanced talks to acquire <a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a>’s European wireless tower business.</div>
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<p>Preceding my comments on LVS and CK Hutch are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.</p>
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This week in StubWorld ...



Reportedly Las Vegas Sands (LVS US) is exploring the sale of its Las Vegas hotel-casinos, the result of which would concentrate its gaming portfolio in Macau and Singapore.   Cellnex Telecom Sau (CLNX SM) is understood to be in advanced talks to acquire CK Hutchison Holdings (1 HK)’s European wireless tower business.


Preceding my comments on LVS and CK Hutch are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.




StubWorld: Macau/Sing Focus As LVS To Ditch LV; CK Hutch In Tower Talks

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Thematic (Sector/Industry)

<div>With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.</div>

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.

Asia gaming and consumer discretionary analyst

Michael Ting

Equity Bottom-Up

<p>Our top pick within the Macau gaming space remains <a href="https://www.smartkarma.com/entities/sjm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:805:1" rel="noopener">Sjm Holdings (880 HK)</a> due to the expected opening of Grand Lisboa Palace in either late FY20 or early FY21. Using <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> as an example whose share price outperformed the sector in FY19 by 19% due to GGR (gross gaming revenue) market share gains from the new Morpheus hotel, we believe SJM's share price in FY21 may also see sector outperformance due to the earnings benefits of new capacity.</p>

Our top pick within the Macau gaming space remains Sjm Holdings (880 HK) due to the expected opening of Grand Lisboa Palace in either late FY20 or early FY21. Using Melco Resorts &amp; Entertainment (MLCO US) as an example whose share price outperformed the sector in FY19 by 19% due to GGR (gross gaming revenue) market share gains from the new Morpheus hotel, we believe SJM's share price in FY21 may also see sector outperformance due to the earnings benefits of new capacity.

Macau Gaming Stocks: How to Position Over the Next 6-12 Months

<p>Macau August GGR (gross gaming revenue) continued to be weak -94.5% yoy despite the resumption of visas from Zhuhai and the rest of Guangdong Province during the month. We expect September GGR to decline 94% yoy given lower seasonality. Our channel checks for October Golden Week hotel bookings indicate Macau travel demand could be weaker vs. previous Golden Week periods. Overall, we expect the recovery in Macau sector revenues to be a slow process. Top sector pick is <a href="https://www.smartkarma.com/entities/sjm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:805:1" rel="noopener">Sjm Holdings (880 HK)</a> .</p>

Macau August GGR (gross gaming revenue) continued to be weak -94.5% yoy despite the resumption of visas from Zhuhai and the rest of Guangdong Province during the month. We expect September GGR to decline 94% yoy given lower seasonality. Our channel checks for October Golden Week hotel bookings indicate Macau travel demand could be weaker vs. previous Golden Week periods. Overall, we expect the recovery in Macau sector revenues to be a slow process. Top sector pick is Sjm Holdings (880 HK) .

Macau August GGR: When Do the Punters Return?

<p>We compiled 2Q20 Macau gaming market share from the gaming operators' financial reports. One key takeaway is that VIP GGR as a percentage of the total has risen for the third consecutive month. This helps headline sector GGR growth,  but may result in slower sector EBITDA recovery given low VIP margins relative to mass. A second takeaway is that with low VIP turnover, VIP hold rates have a significant divergence from historical norms leading to market share figures which are outliers compared to historical values. We believe hold rates will remain volatile until gaming volumes normalize hence would not read too much into current headline GGR market share numbers. Assuming gaming demand normalizes in FY21, our top sector pick would be <a href="https://www.smartkarma.com/entities/sjm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:805:1" rel="noopener">Sjm Holdings (880 HK)</a> which has the potential to at least see a 50% increase in EBITDA next year given the opening of Grand Lisboa Palace. </p>

We compiled 2Q20 Macau gaming market share from the gaming operators' financial reports. One key takeaway is that VIP GGR as a percentage of the total has risen for the third consecutive month. This helps headline sector GGR growth,  but may result in slower sector EBITDA recovery given low VIP margins relative to mass. A second takeaway is that with low VIP turnover, VIP hold rates have a significant divergence from historical norms leading to market share figures which are outliers compared to historical values. We believe hold rates will remain volatile until gaming volumes normalize hence would not read too much into current headline GGR market share numbers. Assuming gaming demand normalizes in FY21, our top sector pick would be Sjm Holdings (880 HK) which has the potential to at least see a 50% increase in EBITDA next year given the opening of Grand Lisboa Palace. 

Macau 2Q20 Market Share Review: Outliers Everywhere with an Unfavorable Mix

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: Macau/Sing Focus As LVS To Ditch LV; CK Hutch In Tower Talks

Reportedly Las Vegas Sands (LVS US) is exploring the sale of its Las Vegas hotel-casinos, the result of which would concentrate its gaming...

David Blennerhassett

China Macro and Geopolitical Briefing

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and...

JL Warren Capital

Macau Gaming Stocks: How to Position Over the Next 6-12 Months

Our top pick within that Macau gaming space remains Sjm Holdings (880 HK) due to the opening of Gr

Michael Ting

Macau August GGR: When Do the Punters Return?

Macau August GGR (gross gaming revenue) continued to be weak -95% yoy despite the resumption of visas from Zhuhai and the rest of Guangdong...

Michael Ting

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

StubWorld: Macau/Sing Focus As LVS To Ditch LV; CK Hutch In Tower Talks

Reportedly Las Vegas Sands (LVS US) is exploring the sale of its Las Vegas hotel-casinos, the result of which would concentrate its gaming...

David Blennerhassett

China Macro and Geopolitical Briefing

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and...

JL Warren Capital

Macau Gaming Stocks: How to Position Over the Next 6-12 Months

Our top pick within that Macau gaming space remains Sjm Holdings (880 HK) due to the opening of Gr

Michael Ting

Macau August GGR: When Do the Punters Return?

Macau August GGR (gross gaming revenue) continued to be weak -95% yoy despite the resumption of visas from Zhuhai and the rest of Guangdong...

Michael Ting

Macau 2Q20 Market Share Review: Outliers Everywhere with an Unfavorable Mix

We compiled 2Q20 Macau gaming market share from the gaming operators' financial reports. One key takeaway is that VIP GGR as a percentage of the...

Michael Ting