Casino Investors Pondering Whether To Hold or to Fold
Casino companies are winning big these days. So why aren't their stocks paying off?
The Nevada Gaming Control Board says casinos in the state won more than $1 billion from gamblers in March alone. Big casino operators like MGM Mirage and Harrah's Entertainment Inc. have posted strong profits, and Wynn Resorts Ltd. opened a glistening Vegas resort with publicity that helped the whole Strip. And there are new opportunities in Asia.
Yet casino stocks as a group are down sharply in recent months, including two big players, Wynn Resorts and Las Vegas Sands Corp. Wynn has dropped 40% since mid-March, and Las Vegas Sands at one point had fallen almost 40% since it peaked in December, shortly after the company went public.
Other players, including Harrah's, which is expected to complete its acquisition of Caesars Entertainment Inc. by the end of June, and MGM Mirage have seen their stocks slip but do better than their rivals. As of 4 p.m. yesterday in New York Stock Exchange composite trading, Harrah's shares were at $70.51, down 2.9% from a 52-week high of $72.60 on April 13. MGM, which exercised a 2-for-1 split last week, traded at $36.24 on the Big Board, off a split-adjusted 8% since February.
Investors, it seems, are getting nervous about their cards. They are asking questions: How soon will the gambling jackpot in Asia hit, if ever? And when will that high-profile, $2.7 billion Wynn Las Vegas resort begin to show a profit?
A New York-based hedge-fund manager with casino investments says he has never seen the sector so jittery. "There's a lot of fast money chasing in and out," he said.
Wynn Resorts -- headed by Las Vegas legend Steve Wynn , mastermind behind the Mirage and Bellagio -- reported a wider loss for the first quarter because of costs for the new Vegas property. Meanwhile, Mr. Wynn is doubling down, pushing ahead with other major projects in Vegas, Macau and Singapore.
As of 4 p.m. yesterday in Nasdaq Stock Market composite trading, Wynn traded at $46.19, down from its high of $76.45 on March 16, about a month before its casino opened on the north end of the Strip. Casino stocks often run up in the months before a big resort opens, then drop right before the debut as investors anticipate opening-day snafus. Sure enough, Wynn Resorts' new Strip casino has been retooling its big-ticket theatrical production, Le Reve.
There also are doubts from analysts about the company's plans in Macau, where Wynn is building an $845 million project, and a proposed resort in Singapore.
Wall Street also finally has realized that the Chinese government controls how many people can visit Macau, near Hong Kong. "Macau is a capacity-strained market at this point," says Jeffrey Logsdon, gambling and lodging analyst at Harris Nesbit in Boston. "And with Wynn, since the property just opened, you're essentially trying to value the company for what it will look like in 2009."
Wynn President Ron Kramer says investors are making "more of a trading call than a fundamental investment call." He worries that "people are missing the big picture on just how good casinos are at being cash generators and how strong our underlying real-estate assets are."
But Asian fears are addling Las Vegas Sands investors, too. Executives spent much of their first-quarter conference call defending weaker-than-expected results from the company's first casino in Macau, which opened last May, although overall quarterly results were strong.
The company's shares sank to $33.10 on Monday of last week, the lowest price since Las Vegas Sands made its debut on the New York Stock Exchange and off about 40% from a high of $53.98 in late December. At 4 p.m. yesterday, the stock traded at $37.20.
Asia is still where many Las Vegas Sands investors expect to see the most-explosive growth, however. The Sands Macao is the first casino run by a U.S. company to open in the only region of China where casino gambling is legal, but the company is figuring out how to capture customers there. Others are watching, including Mr. Wynn and MGM Mirage, which has entered into a joint venture with Pansy Ho, the daughter of Macau gambling mogul Stanley Ho.
"The concept of Macau is really an intermediate and longer-term idea," says William Weidner, president and chief operating officer of Las Vegas Sands. "But certainly, when those kinds of valuations in the market change, it makes you scratch your head."
He defended the company's results thus far in Macau: "The first quarter's growth there was 17%. The market had been getting used to rates of 30% to 40%, so when they see this lowered rate, there's sort of a panic -- an overcorrection in modeling long-term value from a short-term wrinkle."
For Las Vegas Sands' billionaire founder and chief executive, Sheldon Adelson, the stock's tumble has erased more than $5 billion of the value of his shares.
But Mr. Weidner is undeterred. "Nothing about our fundamentals has changed," he says. "If anything, we are more bullish about what will happen in 2008 and 2009."
博彩类股走背运
这些天赌场公司财源广进。因此它们的股票下跌就有点不可思议。
内华达州赌博管理委员会(Nevada Gaming Control Board)称，该州赌场仅在3月份就盈利10多亿美元。像MGM Mirage和Harrah's Entertainment Inc.这样的大型赌场运营商纷纷实现骄人业绩，永利渡假(Wynn Resorts Ltd.)熠熠生辉的新酒店开张，为整个拉斯韦加斯大道增添了无限光彩。亚洲也有新的机会。
然而赌场类股近几个月却一落千丈，包括两家大型运营商永利渡假和Las Vegas Sands Corp在内。永利渡假自3月中旬以来下挫40%，Las Vegas Sands上市不久后于去年12月达到顶峰，但随后也一度下跌近40%。
包括Harrah's和MGM在内的其他赌场运营商类股也纷纷走低，但表现略好于竞争对手。Harrah's有望在6月底之前完成对Caesars Entertainment Inc.的并购。截至周一收盘，Harrah's报70.51美元，较4月13日创下的72.60美元52周高点下跌2.9%；上周刚刚执行一股拆两股拆股计划的MGM报36.24美元，计入拆股因素后较2月份下跌8%。
投资者似乎对手中的筹码令他们心存疑虑的是：即便亚洲博彩业能够兴旺发达，但要等到什么时候？耗资27亿美元的韦恩拉斯维加斯酒店赌场(Wynn Las Vegas)何时能够开始盈利？
一位有博彩类股投资的纽约对冲基金经理称，他从未见过该类股票如此动荡不安，大量资金快进快出。
拉斯韦加斯赌王史提芬?永利(Steve Wynn)旗下的永利渡假公布第一财季亏损额扩大，原因是新开赌场产生巨额成本。与此同时，永利正在多管齐下，在拉斯韦加斯、澳门和新加坡推出其他大型项目。
纳斯达克市场周一收盘，永利渡假报46.19美元，远低于3月16日创下的76.45美元高点。当时距其拉斯韦加斯大道北端的新酒店开张还有大约一个月。博彩类股通常在一个大型赌场开张前几个月上扬，而在开张前不久则会下挫，因投资者担心开张当日出现混乱局面。不出所料，永利渡假这家新酒店重新包装设计了大型戏剧表演Le Reve。
分析师对该公司在澳门的计划以及拟议中在新加坡建设的赌场也心存疑虑，永利在澳门有一个耗资8.45亿美元的项目。
华尔街终于意识到，中国政府控制著大陆到澳门的旅游人数。波士顿Harris Nesbit的博彩业分析师杰弗里?罗格斯顿(Jeffrey Logsdon)称，从这一点来看，澳门是一个资本限制市场。对于永利渡假而言，新赌场刚刚开张，人们基本上是基于对2009年的预期来估价这家公司。
永利渡假总裁罗纳德?克雷默(Ron Kramer)称，投资者主要是基于对交易的预期，而不是基于基本面进行投资。他担心人们可能对好酒店财源滚滚的大环境以及永利渡假房地产资产的强劲程度视而不见。
对亚洲业务的担忧也使得Las Vegas Sands的投资者一头雾水。尽管该公司整体业绩非常强劲，但管理人士仍不得不在讨论第一季度的电话会议上花大量时间对其在澳门第一个赌场弱于预期的业绩进行解释。
上周一收盘时，Las Vegas Sands跌至33.10美元，创下该股在纽约证交所上市以来的最低点，较其12月末53.98美元高点下跌40%。该股本周一收于37.20美元。
但Las Vegas Sands的很多投资者仍然预计亚洲业务将有爆炸式增长的机会。澳门金沙娱乐场(Sands Macao)是该公司在澳门开设的第一家赌场，但该公司正在使出浑身解数吸引这里的赌客。澳门是中国唯一一个合法赌博地。韦恩和MGM Mirage等仍在观望，后者已经同澳门赌王何鸿 (Stanley Ho)之女何超琼(Pansy Ho)签署了合资协议。
Las Vegas Sands总裁兼首席运营长威廉?韦德纳(William Weidner)称，对澳门的设想是一个中长期发展计划，但毫无疑问，当市场的估值发生变化时，你会有些摸不著头脑。
他对澳门赌场的业绩作出的解释是：“第一季度的增长为17%，市场对30%至40%的增长率已经司空见惯了，因此一看到这么低的增长率，就会有些恐慌，并且以短期的波动来过分地调整长期价值预期。”
而对于Las Vegas Sands的创始人兼首席执行长谢尔登?阿德尔森(Sheldon Adelson)来说，该股的下挫已经令他的股票价值缩水50多亿美元。
但韦德纳仍然信心坚定。他表示，公司基本面没有发生任何变化。如果说发生了什么变化的话，那就是，他们对2008年和2009年的前景更有信心了。
