Visa Worries Maul Melco
Editor's note: "Bricks and Mortar" is a series of columns written by real estate reporter Nicholas Yulico meant to help TheStreet.com readers generate real estate and gaming-related stock ideas.
My bullish thesis on Macau casino developer Melco PBL (MPEL) is taking longer than expected to play out -- but I stand by my views.
Lately, Melco shares have been slammed because of fears about the Chinese government's recent decision to restrict travel visas to Macau, the only region of China where gambling is legal. There also has been a rising short interest in the stock.On Tuesday, Melco shares were down 4.9% to $12.50, hitting a 52-week low. But Melco's management is finally taking steps to reassure investors, who have watched shares fall 35% since late April. Melco recently hired Geoffrey Davis, a former Citigroup casino analyst, to work as a senior vice president handling U.S. investor relations, says a buy-side source who owns Melco shares. Davis is based in the U.S. and has already held meetings with several institutional shareholders, the source says. The hiring of Davis is very positive news, since investors previously have had to call Hong Kong to get any information on the stock. A call to the Citigroup equity research gaming desk confirmed that Davis left in recent months. Melco and Davis couldn't be immediately reached for comment.
Visa VexationsDavis' primary agenda will be to explain just how bad the new China visa restrictions are for Melco. The company opened its first casino, Crown Macau, in May. Two more casinos will be developed in coming years, and I expect Melco to become a dominant player in Macau. (You can read more about my bullish views on Melco
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