GAMING: Melco Crown profit misses estimate on lower high-stakes win rate

2013-11-6

From：Macau Business

Melco Crown Entertainment Ltd., the Macau casino venture between James Packer and Lawrence Ho, posted third-quarter earnings that missed estimate on a lower win rate from high-stakes gamblers.
Adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, rose 39 percent to USD315.2 million, Melco Crown said in a statement to Hong Kong’s stock exchange, less than the USD328 million average estimate from four analysts compiled by Bloomberg, Net income climbed to USD179.4 million from USD104.9 million a year earlier, the company said.
“Adjusted EBITDA was driven by significant growth in the mass market table games segment at City of Dreams, as well as improved group-wide rolling chip volume and a committed approach to controlling costs, partially offset by a lower rolling chip win rate,” Melco said in the statement.
Melco Crown is building its Studio City casino resort on the Cotai strip. The Hong Kong-based company is taking on larger competitors, including Sands China Ltd. and Galaxy Entertainment Group Ltd., which have been adding new attractions on Cotai to profit from the faster-growing mass gambling segment.
City of Dreams, Melco Crown’s flagship casino in the world’s largest gambling hub, attracts mainland visitors with popular shows such as “The House of Dancing Water” which features motorcycle stunts and the cabaret-style “Taboo” show. Melco Crown climbed 1.8 percent to close at HKD88.15 in Hong Kong trading, before the earnings announcement. The stock has more than doubled this year, beating the city’s benchmark Hang Seng Index’s 1.7 percent gain.
City of Dreams’ mass-market table-game revenue increased 36 percent to USD1.21 billion while slot-machine handle gained 52 percent to USD1.24 billion. VIP rolling-chip volume gained 17 percent to USD22.8 billion. Rolling chip win rate fell to 3 percent from 3.2 percent a year earlier.
The company is expanding both at home and overseas as it sees capacity constraints in Macau, including land and labor shortages. In the Philippines, Melco is partnering with Belle Corp. to develop and operate a casino resort in Manila which is expected to cost USD1 billion. Belle holds one of four casino licenses in the Southeast Asian nation.
Lawrence Ho, a son of casino mogul Stanley Ho, is investing in two Russian casino resorts through his other two companies, Melco International Development Ltd. and Summit Ascent Holdings Ltd.
Gambling revenue in Macau grew 18 percent to 297.1 billion patacas in the first 10 months of this year, close to the USD38 billion revenue it raked in last year. Bloomberg

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