Casino Industry Essay

Find out why the Macau looseness scene is so important-The fellowship intends to use the proceeds from this sales agreement to pay off part of their debt -The germinate has traded significantly high since the annunciation of the deal, but we believe that this is a huge missed luck for the partnership in a new, booming market and will hurt the comp both over the long-term as competition exserts to splay in this field of force (2). -Caesars is the largest cassino operator in the U.S-Properties include Las Vegas, Atlantic City, Indiana, lah, Mississippi, and several early(a) states More on the Macau opportunity, this may be a little out find outd -Only major casino family without a post Macau-Caesars bought the 175-acre site in 2007 for $578 million, with plans to develop a hotel and casino, but the caller-out did not apply in the early 2000s for one of the limited number of gambling licenses in Macau, and it neer gained a gambling concession from the Macau government (2) -As of July 31, 2013, growth in Macau has increased to over 20% on a yr over year basis boosted by an increase in the number of Chinese visitors to the countrys altogether legal casino gambling hub. Julys 29.5 trillion patacas ($3.7 billion) tax income was the third strongest figure this year, according to government data, as more middle-class gamblers visited Macau, eclipsing the growth in the number of high rollers. The meanwhile in Chinas economical growth has unplowed out most wealthy customers, who often spend 1 million kwai ($160,000) per bet, but it failed to push away Macaus appeal for Chinas rapidly expanding middle-class and their higher disposable incomes (2) what be pacatasWhy Maccau Is attractive for Casino Industry-The number of visitors to Macau rose 4.2 pct during the first half of the year (in 2013) -Visitors form mainland China, who account for two thirds of the total numbers, so ard 20 percent in July year over year numbers. High rollers account for slightly 70 percent of dramatic play tax tax receiptss, but the share of the middle-class gamers is outgrowth at a much faster rate and Macaus casinos are trying to diversity entertainment options to attract more of these visitors (2) -Minimum table bets fail at around 300 patacas($38), compared to a year ago when fling bets for 100-200 patacas ($20) -In the end, investors should not control seen the sale of this lieu as a catalyst for the stock, but instead as the huge missed opportunity to diversify the play alongs core business and expand into an fickle new market (2) -because the stock price went up when they sold Macau location -Macau casinos and hotels are now showing strong September gaming revenue -At the period rate, gambling revenue for the month of September so far is tracking 25.7% higher than the same month a year ago. Macau generates annual gambling revenue topping $38 billion, larger than any other casino district in the world, about five generation the annual take of U.S. gambling in Las Vegas (3) -Macau, a special gaming district on Chinas southern coast, is the only localise in China where gambling is legal -We believe that the run up in CZR shares has been on the coattails of the other gaming and hotel companies and that the buying has been way overdone. Investors should loko for the stock to pull back substantially after the recent rally question if all of this stuff is still trueThe most Recent Quarter- charge On the Important Aspects of This Business -Most recent quarter is Q2, net revenue was reported by Caesars as $2.2 billion -A decomposition in casino revenue was largely offset by increases in F&B, rooms, and managed revenue -The social club attributes this reject to a combination of macroeconomic conditions, competition, and a gaucherie in marketing strategy. The company has lost market share in gaming to competition, despite the companys positioning with the World serial of Poker brand (4) this is about gaming competition-Alpha research believes that revenue and profits guard peaked and will be on the decline next year (2014), they were correct -Income form operations $125.3 million in 2013, down $63.8 million compared to the prior year, 33.7% decline was driven by higher asset impairment charges (learn more on this) -Adjusted EBITDA declined 8.2% to $470.5 million and property EBITDA declined 4.9% to $492.8 million compared with the year-earlier period (4) -Investors should focus on the lower gaming revenue-Casino revenue in Las Vegas declined approximately 15.5% year-over-year, primarily due to breathing out of market share and visitors and weaker gaming glitzs (4) -The same trends are occurring in the Atlantic City region-Gaming revenue was down due to lower ill driven by primarily new competitive threats -CZR market volume in Atlantic city has declined, and market share has declined overall my ghost is that they should look more to online gaming, because technology and internet are booming, maybe contain joining with another casino manufacturing- why is competition doing better -The company is facing increased competition in certain areas like Louisiana/Mississippi, Tunica, and Las Vegas and Atlantic City -Find specific competitors- hassle The companys investments in current properties and new construction may prove to be as well little, too late, as the projects have become increasingly costly over the choke two yearsThe Debt Burden get more up to date information-At the quarter end (Q2 2013) for Caesars Entertainment, Inc. was $23.7 billion. -Debt, net of $1.8 billion of hard capital, was $20.9 billion-Total debt repurchased was only around $275 million during last quarter -Reports of a possible bankruptcy, have been increasing since Moodys downgraded the companys credit judge to one of its lowest trains in April 2013 -Cash period growth is not judge to increase in 2013, as a result of a pick up drop fueled by customers spending less at casino s (5) -Major advert because competitors gaming revenue are continuing to thrive -The company has consistently poured money into new construction and the remodeling of existing organizes, but significant measures need to be taken in order to improve the companys current capital structure. If the company cannot spur major cash ladder generation over the course of the next year, the company will be facing some major problems in early 2015 -Why is January 2015 important? Because that is when $4.4 billion of mortgage-backed securities are scheduled to mature for CZR (figure out more what this means) opportunity, cash flow generation, how? Competitors are outbeating them -Recent report from July 2013, Caesars planned to beef up its product offer in Las Vegas and enter in the Maryland casino market, breaking collection in BaltimoreMajor Areas of Concern for the Future (direct quotes)-No unique value marriage proposal built on approach, scale, geographic reach, brands and loyalty -Not positioned to drive value psychiatric hospital and significant revenue upside -Huge investments made in trying to expand core of businessdeclining revenues in many areas of business will exceed to serious problems if the capital structure is not re-vamped by 2015 -Not executing on development pipeline, expanding domestic distribution and social/mobile gaming weapons platformthe company claims that social gaming has a bright future, but the enigmatical regulatory condition on a state and federal level pose a serious threat to the future of this revenue fountain -Failure to capitilze on pipeline while competitors outride to thrive on an supranational level (failure in Macau and Korea are significant) -Failed focus on managing costs and improve capital structure -Sustained economic reco very(prenominal) has not provided an additional tailwind to the efforts of the companyCOMPETITORS EPS Change (%), Sales growth %CZR -92.74, .16WYNN -1.34, -2.19LVS 18.29, 18.28MGM -165.10, 16.7 1large concern is the significant decline in EPS and sales growth over the recent history for CZR and at such a fast rate -Considering the country has been seeing an economic recovery, consumer spending on gaming and entertainment in Las Vegas has not kept up. With no exposure to Macau, CZR will continue to underperform its peers in the future. The companys current strategy is failing domestically and trying to variation to anything internationally is impossible. The EPS Change of -92.74% and 0.16% Sales Growth is just the beginning of a negative trend for Caesars. With massive amounts of debt and important maturity dates approaching, investors should look for a significant decline in shares as nervousness continues to build. (5)-Based on the cash flow and margins, the quality of the most recent CZR earnings quarter was very poor overall -Negative cash flow per share company is get a significant amount of money to keep operating, and at some point the banks will stop lending and w ant to be repaid harmful position -Cash is king and companies that dont generate cash are not around for a long time chore no cash flow-major debt obligations are due in 2015 and they have no cash, running out of timeUSE ALL THE CHARTS FROM THIS PDF genuinely good for 2013 competitors, etcPotential Bankruptcy-Important to look to the Book Value/ percentage of CZR-this indicates the dollar value remaining for common shareholders after all assets are liquidated and all debtors are paid Financial Strength-Look at PDF-Use of leverage can be a double-edged sword for companies-In the grimace for CZR, it has tried to generate returns supra its cost of capital, for investors benefits. However, with the added risk of the debt on tis books, CZR is a company that has been hurt by this leverage and is unable to generate returns above the cost of capital. The companys losses have been and will continue to be magnified by the use of leverage in the companys capital structure, while they cont inue to renovate existing properties and continue with new construction domestically. With $20.91 B of long-term debt and a large debt to rectitude ratio of 1.04, Caesars will need to significantly overhaul their capital structure if they want to compete and survive in this highly competitive industry (6) compute d/e current ratio for 2014, google their financial statements Problem too much debt, no cash-ROA -4.44%, the company cannot operate expeditiously based on the firms generated profits from total assets