Melco Crown (MPEL): Solid 1Q12; we want to own MPEL shares; raising estimates
May 17 2012
MPEL is a name we want to own in Macau. The shares are too inexpensive relative to the company’s operating track record and growth profile. An obvious catalyst would be Cotai approval, which is forthcoming. We believe MSC will be one of the first to market as pilings are already driven from the original start of the project. Melco Crown reported 1Q12 results this morning. The company reported adjusted EBITDA of $242.5mm, which was well above Street consensus and our estimates. Higher than expected hold helped the quarter, with management noting that assuming VIP hold was at the mid-point (2.85%) of the expected range EBITDA would have been roughly $210 mm. The beat was driven by City of Dreams that reported EBITDA of $198mm, which was $18mm above the Street consensus.