Great Canadian Gaming Corp. T.GC

Q3 conference call recap

[maypeters]

I would highly recommend that all current and potential investors listen to the replay of the call. 

Got some really good insights.


Some of the points discussed below for those who cannot listen and interested in recap: 


1. Minimum Threshold amounts


Rod gave excellent clarity. He mentioned that the current run rate today in terms of the Gross Gaming Revenue (GGR) is higher than the peak minimum threshold amount which will come into place in 4 years for BOTH the GTA bundle and the GTA West Bundle. 

This is before all the amenities are in place and the expansion has completed. 

This is amazing information and just gives an idea of why Brookfield would have been interested (they need minimum 15 - 20% return). 

Hopefully this puts to rest the whole shorters theory and David from Cormarks theory and analysis that GC will make zero money on the $1.5B they will invest. The company was taken down on a bunch of wrong assumptions tailor made to suit the shorters need. 



2. GTA East bundle


Exciting news about Peterborough Casino opening up. Since the capex is now over there will significant cash flow generated from the three properties (Peterborough / Beleville and Thousand Islands) going forward. 


3. River Rock and Hard Rock

The new money laundering regulations have been in place since Jan. The ramp up at Hard Rock will take place slowly. But slot gaming has picked up much better than table games. Hard Rock resumed normal operations from July 25. 


4. Buybacks

The company has bought back shares in September and subsequent to Quarter end. 

During the nine months ended September 30, 2018, the Company purchased for cancellation 278,600 common shares at a weighted-average price per share of $46.02 under the issuer bid

Subsequent to September 30, 2018, the Company purchased for cancellation 751,300 common shares at a weighted-average price per share of $45.71.

So company has bought back a total of 1,029,900 shares effectively returning around $46M to shareholders. 

For common shareholders their stake in GC went up by 1.7% due to the buybacks. 

Company will continue to buy back opportunistically. 


4. Comments from other stakeholers:
 
There were some good comments from stakeholders on how GC was undervalued. I think Rod and management share in the same frustration. One of the stake holders felt that based on peer valuations the stock should be double (so around $85). 


5. Cormark analyst

The guy just does not understand how the minimum threshold works and he got put in place by Rod for wasting time. He may come out with another report with $30 target price which worked out the last Quarter but with this new clarity and the numbers coming in it will be hard for Cormark to make money on their short thesis. 


6. Durham Live

Rod clarified that the will own the world class resort within the Durham Live project along with the restaurants and bars and entertainment centre. The rest of the stuff is owned by the landlord and promotors and they will be more of an achor tenant. He expects the resort to do very well for next 20-30 years+.


7. Other construction and activities

GTA West will be a work in progress and they will be introducing table games and Elements Mohawk and Elements Flamboro in December or so. 



8. Non gaming activities

There was a Qs on the potential for non gaming activities and even though it is in the future once the amenties are built and construction is done - there is much more potential along the same lines as River Rock in BC. 

Management is very excited. 


GLTA