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赌场行业分析

2012-02-06 6页 pdf 109KB 40阅读

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赌场行业分析 c58da9b710df662c BofA Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors...
赌场行业分析
c58da9b710df662c BofA Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 4 to 6. Analyst Certification on Page 3. Link to Definitions on page 3. 11128060 Gaming and Lodging 2012 BofAML Gaming Conference – Day 1 Takeaways „ Day 1 of the BofAML 2012 Gaming Conference On the first day of our 2012 BofAML Gaming Conference, we hosted 4 panel discussions today and a keynote lunch covering regional gaming trends, financing/capital markets, the health of the Las Vegas locals market and key issues in online gaming. Key takeaways below and inside. Regionals: Modest growth, benign promotions will continue Our regional roundtable panel (Dale Black, CFO of ISLE; William Clifford, CFO of PENN; and Anthony Sanfilippo, CEO of PNK) was generally upbeat on revenue trends, expecting modest growth in 2012, though lower than Dec's strong pace. The promotional environment should remain fairly consistent, though one panelist mentioned they have seen a recent uptick they are watching closely. As for new jurisdictions, the recent OH delay for the commercial properties (related to licensing shareholders) should be manageable, but VLT's are still dependent on a lawsuit that remains difficult to predict the timing and outcome on. Las Vegas locals market demand recovering with the Strip Our panelists (Ned Martin, CFO of American Casinos; Josh Hirsberg, CFO of BYD; Tom Lettero, CFO of Cannery Casino Resorts) seemed more optimistic for 2012, after a steady but modest recovery in '11. Spend per visit ($48-50 vs. $60 peak) and a lack of unrated play are the key challenges. Economic headwinds from housing and unemployment are abating, but Locals customers remain very sensitive to promotions. Station has been more aggressive since exiting bankruptcy, but our panelists all said they were disciplined on not chasing unprofitable offers. Prospects for online gaming “as strong as ever” Both our expert panel and keynote speaker (Frank Fahrenkopf from the AGA), believe the climate for federal legalization of online gaming is as favorable as ever. Optimism follows the Dec. DoJ ruling which should boost support from social conservatives, and given cont’d support from commercial operators. Timing would be opportunistic, but before the Nov. election with implementation unlikely until mid-late 2013. Still, all parties noted the DC environment is as negative as ever, making it impossible to handicap an outcome. A state solution (if federal falls through) is less preferred and would result in a smaller, more fragmented environment for customers and operators. Debt markets healthy given low interest rates According to our financing and capital markets panelists, the debt markets remain healthy given historically low interest rates and benign default rates. The markets have seen many refinancings the last 3 years, and panel participants believe this could continue in 2012. Leverage tolerance for new projects is highly “cash” equity dependent (investors looking for 30-50% equity) and run rate leverage of no more than 5.0x. Industry Overview Equity | United States | Gaming and Lodging 19 January 2012 Shaun C. Kelley +1 646 855 1005 Research Analyst MLPF&S shaun.kelley@baml.com Andrew G. Didora, CFA +1 646 855 2924 Research Analyst MLPF&S andrew.didora@baml.com Matthew A. Cole +1 646 743 0210 Research Analyst MLPF&S macole@baml.com W Gaming and Lodg ing 19 January 2012 2 BofAML Gaming Conference Today we hosted day one of our 2012 BofAML Gaming Conference. Our takeaways and highlights from company and panel presentations are below. Regional Gaming Roundtable Recap We hosted Pinnacle Entertainment’s President and CEO Anthony Sanfilippo, Penn National Gaming’s CFO William Clifford, and Isle of Capri’s CFO Dale Black for our regional gaming panel. Management discussed general consumer outlook, region specific performance, and new jurisdictions for 2012. „ General consumer outlook. The regional operators remain cautiously optimistic on consumer spending for 2012. PNK currently sees the strong December rebound continuing into the first half of January. PENN was less encouraged the consumer would continue “roaring back” crediting December’s strong performance to the timing of New Years and moderate winter weather. Management stated the Southern gaming regions (i.e. Biloxi, Tunica) remain under heavy pressure and see no near-term recovery. „ Promotions. Each operator stressed the importance of keeping promotions conservative. PENN said they have has seen a close competitor become more promotional after challenging property managers to raise revenues but limiting property improvements. „ Ohio and new jurisdictions in 2012. PENN specifically cited the surprising strength of the Northeast market and remains bullish for its two Ohio openings despite recent regulatory delays. Specifically, the Toledo property will now open two months late, being pushed back to May 2012, while Columbus remains on track. Both PNK and PENN were cautious when discussing the overall prospects of Massachusetts and believe some of the proposals will over estimate the market’s ability to absorb the supply. PENN remains highly interested in Texas, and sees the state’s legalization of gaming not an issue of if but when. Trends in the Las Vegas Locals Market Our panelists (Ned Martin, CFO of American Casinos; Josh Hirsberg, CFO of BYD; Tom Lettero, CFO of Cannery Casino Resorts) seemed more optimistic for 2012, after a steady but modest recovery in '11. „ Spend per visitor remains down. Spend per visit ($48-50 vs. $60 peak) and a lack of unrated play are the key challenges. Overall, economic headwinds from housing and unemployment are abating, but Locals customers remain very sensitive to promotions. „ Promotional environment. Station has been more aggressive since exiting bankruptcy, but our panelists all said they will remain disciplined in not chasing unprofitable offers. Internet Gaming Panel and Keynote Both our expert panel (Behnam Dayanim, Partner at Axinn, Veltrop, Harkrider LLP, Dan Walsh, Senior Director at Greenberg Traurig LLP, and Peter Reynolds, Director at bwin.party digital entertainment) and keynote speaker, Frank Fahrenkopf (President and CEO) of the American Gaming Association believe the climate for federal legalization of online gaming is as favorable as its ever been. W Gaming and Lodg ing 19 January 2012 3 „ Federal solution chances boosted by DoJ ruling. Optimism reigns following the December DoJ ruling that should boost support from social conservatives, and given organized support from commercial operators. Timing would be opportunistic, but before the election with implementation unlikely until mid-late 2013. Still, all parties noted the DC environment is as negative as ever, making it impossible to handicap an outcome. „ State solution less favorable but is the alternative. A state solution is less preferred and would result in a more fragmented environment env't for customers and operators. However, Internet gaming in some form in the US seems like an inevitability in the next 12-18 months. „ More to come. Clearly, the online gaming issue faces a complicated decision and event path over the next several months. We believe interest remains high from both the industry, certain political constituencies and investors, so we will be monitoring and exploring this topic in more detail in the future. Debt markets healthy given low interest rates According to our financing and capital markets panelists, the debt markets remain healthy given historically low interest rates and benign default rates. The markets have seen many refinancings over the last 3 years, and panel participants believe this could continue in 2012. Leverage tolerance for new projects is highly “cash” equity dependent (investors looking for 30-50% equity) and run rate leverage of no more than 5.0x. Link to Definitions Consumer & Retail Click here for definitions of commonly used terms. Analyst Certification I, Shaun C. Kelley, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or view expressed in this research report. W Gaming and Lodg ing 19 January 2012 4 Important Disclosures FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicators of potential price fluctuation, are: A - Low, B - Medium and C - High. INVESTMENT RATINGS reflect the analyst’s assessment of a stock’s: (i) absolute total return potential and (ii) attractiveness for investment relative to other stocks within its Coverage Cluster (defined below). There are three investment ratings: 1 - Buy stocks are expected to have a total return of at least 10% and are the most attractive stocks in the coverage cluster; 2 - Neutral stocks are expected to remain flat or increase in value and are less attractive than Buy rated stocks and 3 - Underperform stocks are the least attractive stocks in a coverage cluster. Analysts assign investment ratings considering, among other things, the 0-12 month total return expectation for a stock and the firm’s guidelines for ratings dispersions (shown in the table below). The current price objective for a stock should be referenced to better understand the total return expectation at any given time. The price objective reflects the analyst’s view of the potential price appreciation (depreciation). Investment rating Total return expectation (within 12-month period of date of initial rating) Ratings dispersion guidelines for coverage cluster* Buy ≥ 10% ≤ 70% Neutral ≥ 0% ≤ 30% Underperform N/A ≥ 20% * Ratings dispersions may vary from time to time where BofA Merrill Lynch Research believes it better reflects the investment prospects of stocks in a Coverage Cluster. INCOME RATINGS, indicators of potential cash dividends, are: 7 - same/higher (dividend considered to be secure), 8 - same/lower (dividend not considered to be secure) and 9 - pays no cash dividend. Coverage Cluster is comprised of stocks covered by a single analyst or two or more analysts sharing a common industry, sector, region or other classification(s). A stock’s coverage cluster is included in the most recent BofA Merrill Lynch Comment referencing the stock. BofA Merrill Lynch Research personnel (including the analyst(s) responsible for this report) receive compensation based upon, among other factors, the overall profitability of Bank of America Corporation, including profits derived from investment banking revenues. W Gaming and Lodg ing 19 January 2012 5 Other Important Disclosures Officers of MLPF&S or one or more of its affiliates (other than research analysts) may have a financial interest in securities of the issuer(s) or in related investments. BofA Merrill Lynch Global Research policies relating to conflicts of interest are described at http://www.ml.com/media/43347.pdf. "BofA Merrill Lynch" includes Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") and its affiliates. Investors should contact their BofA Merrill Lynch representative or Merrill Lynch Global Wealth Management financial advisor if they have questions concerning this report. 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Research reports prepared and issued by Merrill Lynch (Dubai) are prepared and issued in accordance with the requirements of the DFSA conduct of business rules. Merrill Lynch (Frankfurt) distributes this report in Germany. Merrill Lynch (Frankfurt) is regulated by BaFin. This research report has been prepared and issued by MLPF&S and/or one or more of its non-US affiliates. MLPF&S is the distributor of this research report in the US and accepts full responsibility for research reports of its non-US affiliates distributed to MLPF&S clients in the US. Any US person receiving this research report and wishing to effect any transaction in any security discussed in the report should do so through MLPF&S and not such foreign affiliates. General Investment Related Disclosures: This research report provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. 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Short-term trading ideas and recommendations are different from and do not affect a stock's fundamental equity rating, which reflects both a longer term total return expectation and attractiveness for investment relative to other stocks within its Coverage Cluster. Short-term trading ideas and recommendations may be more or less positive than a stock's fundamental equity rating. BofA Merrill Lynch is aware that the implementation of the ideas expressed in this report may depend upon an investor's ability to "short" securities or other financial instruments and that such acti
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