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WSNC
Traders Alert
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 Elray
Gaming. Inc. (OTC:ELRA)
Online and mobile casino technology, smaller version of Zynga (ZNGA)
- 14 million outstanding, low float...target $0.50+
View Profile/Chart --- ELRA
Quote
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ELRA's Macau
Gaming Acquisition Results in .10 Price Target
By:
staff reporter, Tom Bustamante
Last
Updated: May 31, 2012 - 1:35pm EST
(NEW YORK) --(NEW
YORK) --Ludlow Capital, an equity research firm based out
of New York City, issued a $0.05 to $0.10
price target on Elray
Gaming, Inc, which is traded under the name Elray
Resources, Inc (OTC:ELRA), based
on the acquisition of Macau gaming company, Golden
Match.
Elray Gaming announced a definative agreement that it
has completed the acquisition of Macau gaming
company, Golden Match. The company's principal
business activity is a profit sharing agreement with a VIP
Room Gaming Promoter, the terms of which they receive 80%
of the profit stream from the Promoters, which currently
participates in the promotion of many major luxury VIP
gaming facilities in Macau, China, the largest gaming
market in the world.
The company has negotiated a profit sharing agreement
with Cali Promocao de Jogos Sociedade Unipessoal Lda. (CALI),
a company duly incorporated under the laws of the Special
Administrative Region of Macau, and promotes Casinos in
Macau SAR pursuant to a license issued by the Gaming
Inspection and Coordination of Bureau of the Government of
Macau SAR.
Over the past 5 months, CALI generated approximately $17
million (US) in profit, after tax.
ELRA Merger Valuation
Taking that $17 million profit into consideration, a rough
fiscal year net profit for CALI would be in the range
around $37 million, after taxes. If given a 80% profit
sharing bases, that would give Golden Match, and thus ELRA,
a yearly net profit of around $29.6 million,
ELRA currently has around 700 million shares issued and
outstanding, but for the sake of closing the merger, and
estimating for dilution to close the deal, even at
high-range of 3 billion shares issued and outstanding,
that would still give ELRA an EPS estimate of around $0.01
EPS. At a 10 times multiple, that would give ELRA a
speculative price range target of $0.10 per share.
NASDAQ Listing
In 8K filed May 9th, the Company announced plans to
listing on the NASDAQ or AMEX exchange through a 100:1
reverse split. Although many investors hear reverse split
and head for the hills, under the current deal this move
may be a positive for investors at this level. Under the
agreement, the Company has issued the shares for the
merger, which consisted of an all preferred deal, which is
good for the common shareholder. Now, if they had
conducted the reverse split, and then issued the shares
for the acquisition, that would have been a negative for
shareholders. But under this agreement this should turn
out to be a positive.
In addition, to file your application to list on the
NASDAQ or AMEX, a stock needs to maintain a minimum price
level of around $3.00 to $4.00 a share, thus under this
plan investors should not see any filing to reverse split
the stock until the price reaches a minimum of $0.03 to
$0.04 per share.
But, post split, investors would then be holding shares of
a large Macau gaming stock, with strong revenues and
profit, that would be traded on the NASDAQ or AMEX, and
would then become marginable, and could be recommended by
retail brokerage firms. With all this in consideration,
this move may end up being a strong positive for the
individual shareholders on ELRA.
Based on the value estimates of other publicly traded
Macau gaming companies, a conservative PE of 10 to 15
would still give ELRA a post merger estimate of $0.10 to
$0.15 per share, or a conservative $300 million
post-merger market capitalization. Thus, Ludlow Capital
has issued a near-term target on ELRA in the
range of $0.05 to $0.10
per share.
(or $5.00 to $10.00 post-NASDAQ listing)
Cali currently has agreements in place are with MGM Grand
Macao, a division of MGM Resorts International
(NYSE:MGM),
the Venetian, Wynn Resorts, Limited (NASDAQ:WYNN),
Galaxy Entertainment Group Limited (HKG:
0027), and City of Dreams.
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Contact:
Wall Street Newscast
Email: info@wallstreetnewscast.com
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Safe
Harbor Statements:
This
research report includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Although the Company believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions, such statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected.
Disclaimer:
This is NOT a solicitation to Buy or Sell any security, but rather
is for informational purposes only. Content contained herein
includes facts, views, opinions and recommendations of individuals
and organizations deemed of interest. Wall Street Newscast ("WSNC")
does not guarantee the accuracy, completeness or timeliness of, or
otherwise endorse these views, opinions or recommendations, or
give investment advice. WSNC, its affiliates, or directors, may or
may not hold a position in the above security from time to time,
and investors are encourage to consider this as a possible
conflict of interest when reviewing this information. In
Compliance with SEC Rule 17B Wall Street Newscast was compensated five hundred
thousand restricted
shares, by company, for ongoing research and media coverage. WSNC may hold a position
in above securities from time to time, and
thus should be considered a possible conflict of interest when
reviewing this report and information. These investments may
involve a high degree of risk, thus investors are highly
encouraged to consult with a financial advisor before any and all
investments.
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