Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

Equity Bottom-Up

Melco Resorts & Entertainment / Equity Bottom-Up

<ul>
<li>Despite ongoing double-digit gains in Macau GGR, some faintly bearish sentiment has crept into the Melco trade we see as a buying opportunity.</li>
<li>A strong Q3 earnings beat, solid improvements in its Manila property and the opening of the 780 room/suites design forward Morpheus tower at City of Dreams by Q2 positions Melco for gaining market share of VIP segment.</li>
<li>CEO Lawrence Ho's dramatic Japan facing moves include a promise to relocate corporate headquarters in Japan if his IR bid succeeds.</li>
</ul>We have…


Despite ongoing double-digit gains in Macau GGR, some faintly bearish sentiment has crept into the Melco trade we see as a buying opportunity.
A strong Q3 earnings beat, solid improvements in its Manila property and the opening of the 780 room/suites design forward Morpheus tower at City of Dreams by Q2 positions Melco for gaining market share of VIP segment.
CEO Lawrence Ho's dramatic Japan facing moves include a promise to relocate corporate headquarters in Japan if his IR bid succeeds.
We have…

Melco Resorts: A Gem Hiding in Plain Sight Offers an Entry Point After a Recent Dip

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The primary trend in U.S. equity markets remains bullish, and the usual suspects continue to lead: growth (Tech and FANG), homebuilders, industrials, etc.  Yet unusually bullish price patterns continue to develop in long-term laggards like energy (esp. E&amp;Ps), retail (XRT), and engineering &amp; construction (JEC).  We view this stabilization, or participation, in weak segments as a boost to the market’s breadth, a point of contention in recent months for some, who have pointed out that fewer stocks are trading above their 200-day moving averages.  Attractive entry points are also visible in many cyclical Groups, especially Casinos and Investment Banks.  In today’s report we highlight actionable charts in both Groups... see pages 8-24]

The primary trend in U.S. equity markets remains bullish, and the usual suspects continue to lead: growth (Tech and FANG), homebuilders, industrials, etc.  Yet unusually bullish price patterns continue to develop in long-term laggards like energy (esp. E&amp;Ps), retail (XRT), and engineering &amp; construction (JEC).  We view this stabilization, or participation, in weak segments as a boost to the market’s breadth, a point of contention in recent months for some, who have pointed out that fewer stocks are trading above their 200-day moving averages.  Attractive entry points are also visible in many cyclical Groups, especially Casinos and Investment Banks.  In today’s report we highlight actionable charts in both Groups... see pages 8-24]

U.S. Equity Weekly: Actionable Ideas in Casinos, Investment Banks

<ul>
<li>  Investors in this expanding sector are deluged with me-too analytics that can often inhibit, rather than illuminate the road to smart price discovery driven by under the radar management moves.</li>
<li>Casino stocks have their temperatures taken like flu patients every time news breaks whether it is a true catalyst or simply a vapid space filler for media outlets.</li>
<li>The nature of the symbiotic relationship between standard buy and sell-side analysts and managements unavoidably is built off a process that…</li>
</ul>


  Investors in this expanding sector are deluged with me-too analytics that can often inhibit, rather than illuminate the road to smart price discovery driven by under the radar management moves.
Casino stocks have their temperatures taken like flu patients every time news breaks whether it is a true catalyst or simply a vapid space filler for media outlets.
The nature of the symbiotic relationship between standard buy and sell-side analysts and managements unavoidably is built off a process that…


How Independent Research Can Add Depth to Valuations in High Visibility Sectors like Casinos

<ul>
<li>Wynn Resorts Ltd.(NASDAQ: WYNN) Q3 earnings up 106% led by Macau's Wynn Palace. This reflects powerful VIP upside and marketing margin adjustments that have boosted margins on VIP table games from the previous staple just below 20% to 50%.</li>
<li>Cannibalization of Pennisula property Wynn Macau feared by some analysts did not materialize.</li>
<li>Construction obstacles to property will diminish after neighbor MGM Cotai opens next January</li>
<li>Price at writing in our view does not reflect the full valuation of Macau…</li>
</ul>


Wynn Resorts Ltd.(NASDAQ: WYNN) Q3 earnings up 106% led by Macau's Wynn Palace. This reflects powerful VIP upside and marketing margin adjustments that have boosted margins on VIP table games from the previous staple just below 20% to 50%.
Cannibalization of Pennisula property Wynn Macau feared by some analysts did not materialize.
Construction obstacles to property will diminish after neighbor MGM Cotai opens next January
Price at writing in our view does not reflect the full valuation of Macau…


Propelled by Blowout Q3 Performance in Macau, Wynn Resorts on Runway for Our PT of $200 by 2Q18

<ul>
<li>The stock is cheapest among peers but will the new owners hang in? There clearly is a runway here for gain based on fundamental restructuring of the business model during bankruptcy hiatus. </li>
<li>Development deal in South Korea done, but eyes on Japan and Brazil. The company will need to give up more equity to financial partner than would be license competitors.</li>
<li>Many of its regional US legacy properties are dated, sitting in flat to slow growth markets.</li>
</ul>Slimming of the portfolio could be bullish to pile…


The stock is cheapest among peers but will the new owners hang in? There clearly is a runway here for gain based on fundamental restructuring of the business model during bankruptcy hiatus. 
Development deal in South Korea done, but eyes on Japan and Brazil. The company will need to give up more equity to financial partner than would be license competitors.
Many of its regional US legacy properties are dated, sitting in flat to slow growth markets.
Slimming of the portfolio could be bullish to pile…

Caesars Entertainment: Ex-Bankruptcy, the Stock Is Cheap, but Masks Risk: Asia Pivot Key

United States

Wynn Resorts, Limited owns and operates luxury hotels and destination casino resorts in Las Vegas, Nevada, Macau, and China. The Company offers amenities such as guest rooms and suites, restaurants, golf course, and an on-site luxury automotive dealership.

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Wynn Resorts (WYNN US)

Melco Resorts: A Gem Hiding in Plain Sight Offers an Entry Point After a Recent Dip

Despite ongoing double-digit gains in Macau GGR, some faintly bearish sentiment has crept into the Melco trade we see as a buying opportunity. A...

Howard J Klein

U.S. Equity Weekly: Actionable Ideas in Casinos, Investment Banks

The primary trend in U.S. equity markets remains bullish, and the usual suspects continue to lead: growth (Tech and FANG), homebuilders,...

Vermilion Research

How Independent Research Can Add Depth to Valuations in High Visibility Sectors like Casinos

Investors in this expanding sector are deluged with me-too analytics that can often inhibit, rather than illuminate the road to smart price...

Howard J Klein

Propelled by Blowout Q3 Performance in Macau, Wynn Resorts on Runway for Our PT of $200 by 2Q18

Wynn Resorts Ltd.(NASDAQ: WYNN) Q3 earnings up 106% led by Macau's Wynn Palace. This reflects powerful VIP upside and marketing margin adjustments...

Howard J Klein

Caesars Entertainment: Ex-Bankruptcy, the Stock Is Cheap, but Masks Risk: Asia Pivot Key

The stock is cheapest among peers but will the new owners hang in? There clearly is a runway here for gain based on fundamental restructuring of...

Howard J Klein

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