This is a teaser that came in from Ian Cooper’s Early Alert Trader, which has sent us some Macau teasers before. This is for an $18 RFID company that makes the chips and table systems that enable more secure tracking of table games, with a big potential Macau business, but if you actually go back and read the teasers about 75% of this teaser is an exact copy of the last Ian Cooper teaser, for PacificNet a few months ago. Lots of talk about Macau’s general fabulousness as an investment mecca, portraits of Steve Wynn and Sheldon Adelson as the favored poster boy gazillionaires for this sector, etc. etc.
PacificNet, for those who don’t remember, is a company with technology for the one-armed bandits of Macau, and Ian thought it was going from $7 to $50 (so far, it’s making what I can only assume Ian believes is a brief stop down at $5 first). So, not necessarily any rush here.
But still, let’s figure this one out.
The main clue is that this company makes RFID-enabled chips and tables, and that they’ve so far signed a deal (“this year”) with Wynn Macau. Ian says that the “major players are lining up at this company’s door.”
He says that the estimated cost of an RFID-equipped table is $8,000, and that there will be 4,600 tables in Macau casinos by the end of next year. You can do that math and be impressed on your own time (though there’s no promise, of course, that prices will remain that high or that all tables will be RFID-equipped).
There have been other buyers, too: “Macau Galaxy Group, a conglomerate of casinos in Macau, forked over a huge check to this company for an order of 285,000 RFID-embedded chips to be used in its flagship casino, the StarWorld.”
And as to the stock price: “It was trading up around $20 as recently as October but as I’m writing to you it’s selling for around $18.”
And, as I always love to see, he has a very specific prediction: you’re going to bank 425% on this one.
Which means that it’s time to start feeling sorry for our friend Mr. Cooper, because although this ad is still up online it’s clearly several months old … the shares of this one, just like the shares of PACT a while back, have tumbled significantly and if you thought $18 was a bargain back on April 30 — as this tease implies — then today’s price of $13.50 will probably have you running to sell your house to pick up shares.
Please don’t. Seriously. Not on my account, at least.
This company may be fine, but recent months have not been particularly generous to the shares — and here I am, neglecting to even tell you what company we’re talking about.
This teaser is for Gaming Partners International Corp (GPIC).
Then again, if we were looking at 425% gains from $18, that would have been (and perhaps may eventually be) a share price of $76.50. And if we’re going to $76.50 from the current $13.50, then that’s a tasty return of more like 565%. Even better!
PACT, if you recall, took a tumble when they were delinquent in their filings, and what do you know, GPIC did essentially the same thing — they fell when they got a delisting warning for delinquency, then fell further when they reported worse than expected earnings (dipping down to $10 or so for a little while, even) and finally stabilized (if you can call it that) in the neighborhood of $14 over the last couple weeks.
The company has been announcing orders with the big Macau casinos, including Sands, and it does have a big share of the standard table game business as well as this RFID stuff. I have no idea if the accounting problems are behind them, as the company seems to believe, but it is certainly a real business, and they even have an eensy teensy dividend.
So … an interesting little tease, made more so by the fact that it’s almost identical to another Macau tease from the same guy, and by the fact that both companies got hit for almost the same reason in roughly the same timeframe. One might charitably conclude that accounting is more difficult for the gaming equipment companies.
If you’ve any experience with GPIC, feel free to share it with us. The earnings are, to give some credit, expected to increase pretty dramatically as current orders hit the bottom line, and the two analysts who cover this one see them earning close to a dollar in 2008. Maybe they’re right, maybe not, but at least you know where to start your research … and it didn’t cost you $995 (which is, by the way, the discounted price for Early Alert Trader).