Thursday, September 27, 2007

Cheap Chip stock?

The gaming stocks have had a great run, but Gaming Partners (GPIC 9.40) is close to it's yearly low, after being cut in half sine May. Their web site will tell you that "GPI USA, previously known as Paulson Gaming, manufactures the widest range of products for live games for licensed casinos. GPI USA offers Paulson and Bud Jones chips, 3 brands of precision dice, felt and synthetic layouts, playing cards, tables and other gaming accessories to all North American casinos. All GPI products have a proven track record because they combine aesthetic appeal, reliability and security. Security is the key. A large selection of security features can be added to chips, dice and playing cards to make them safer and to prevent counterfeiting."

The chips, the currency of the casinos, are increasingly complex to prevent counterfeiting. RFID microchips in the chips provide security and easy counting, while holograms, ultraviolet and luminescent pigments, laser inscriptions, and chip designs make each casino's chip unique. Bud Jones has been selling chips for 40 years, GPI's SAS, (Bourgogne et Grasset) has supplied chips and plagues to casinos around the world for 80 years. 28 out of 30 of the largest domestic casinos use their chips. So why is the stock down? It was answered in yesterdays news.

Yesterday, GPI announced that the Venetian Macau had ordered 2 million of their high security chips, and they were used at all of the Venetian's 870 tables. Analysts were fretting that Matsui and Australia's Dolphin products were making inroads in Macau, as GPI's earnings weakness was only in Asia. Now it's possible that the casino companies in Macau are just doing business with their "home" team, and GPI's earnings were affected by the costs for the chip rollout and RFID embedded plagues for the Venetian Macau. At this price, it's worth a look, and any positive news could give the stock a boost.

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