• VUME · OTCQB
  • HVPA · OTCQB
  • TAEC · OTCQB
  • VPLM · OTC
  • EGLE · NASDAQ
  • By clicking "Subscribe", you agree to our Disclaimer and Privacy Policy.

    Ludlow Issues $0.04+ Target on ELRA Based on Macau Gaming Merger

    Written by:

    Bookmark and Share

    Ludlow Issues $0.04+ Target on ELRA Based on Macau Gaming Merger Last Updated: June 15, 2012 - 7:15am EST

    (NEW YORK)-Ludlow Capital, an equity research firm based out of New York City, issued research upgrades 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, with a near-term target of $0.04 to $0.05, and longer-term target of $0.10 per share.

    Elray Gaming announced a definative agreement to complete 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, before operating expenses.

    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.

    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 margin able, 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.

    CONTACT:

    Ludlow Capital, Inc Phone: (347) 483-0121 Email: [email protected]

    ——————————————————————————————————————————————- Safe Harbor Statements: This investor presentation may include 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. Ludlow Capital, Inc (“Ludlow”) does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. In Compliance with SEC Rule 17B, Ludlow was compensated one million restricted shares, by the company, for public relations and media services. Ludlow, its directors, and affiliates, 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.

     

    June 18, 2012 @ 7:41 pm Trackback URL Posted in Articles/Opinions, Hot Stocks, Industry News, Newsletter and tagged with , , , , , , , , , , , .