Union Gaming Research publishes company research and analysis on the global gaming industry. Our research analysts continually identify and analyze financial information and trends that affect the industry.
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Search Within
Melco Crown (MPEL): 3Q12 results review; mass market continues to shine
November 07 2012
MPEL announced 3Q12 results tonight. Net revenues of USD1,011mm (-4% y/y) were above both our expectations of USD970mm and the Street at USD1,005mm. EBITDA of USD226mm (-6% y/y) was also above both our forecast of USD211mm and the Street at USD213mm. After adjusting for a positive luck factor in 3Q12, EBITDA would have been about USD210mm, or inline with our expectations.
We continue to like shares of MPEL given the company’s exposure to Cotai, which should enable it to outperform market growth over the next three years. We also expect the company to outperform with respect to the high-margin mass tables and slots business, again due to its presence on Cotai and the continued ramping of this segment at its City of Dreams property. We’re raising our price target to USD21 today (+USD3) to include the present value of the company’s share of Macau Studio City and are maintaining our Buy rating.
Macau round up: Melco International to launch “The House of Dancing Water” in Beijing; local legisla
October 03 2012
“The House of Dancing Water” to launch in Beijing - Over the weekend, Beijing government officials and representatives from Melco International Development (0200 HK) signed an agreement to launch the water show “The House of Dancing Water” in Beijing. Please note that it is not Melco Crown (MPEL, Buy rated) that is developing this project. The project will be located near the “798 Art zone” in the capital city with a total construction area of 12,000 square meters (130,000 square feet), co-constructed by both Melco International and the government. The first phase is scheduled to start construction around Chinese New Year 2013 and the theater is ultimately expected to be two and a half times larger than its sibling in Macau in order to accommodate audiences of 5,000 persons (as compared to the Macau version, with a maximum capacity of 2,000). It will be part of a much larger 50 billion RMB (~8 billion USD) complex that will also include an art village, international art galleries, hotels, apartments and an international art trading center. The House of Dancing Water is a water-based show that mixes theatre, acrobatics, stunts, dance and entertainment, and opened at MPEL’s City of Dreams in September 2010 and attracted 1 million visitors during its first seventeenth months of operation (through early 2013).
We believe the project will be beneficial to MPEL’s City of Dreams property in Macau even though the company is not formally involved in the development and operation of the Beijing version of the show. The show’s presence in Beijing (northern China) should strengthen its brand recognition and could ultimately lead to incremental visitation to Macau in general and to the City of Dreams in particular.
Melco Crown (MPEL): The positive news on Macau Studio City that we’ve been waiting for?
September 24 2012
A top government official says table games will be allocated to Macau Studio City
Local media outlets, including the Macau Business Daily, are reporting that very positive government commentary was made over the weekend with respect to Melco Crown’s ability to offer casino gaming at its Macau Studio City (MSC) project. In a government statement on the market-wide table games cap post-2012, Francis Tam (Secretariat for Economy and Finance) noted that some of the new tables would be allocated to Macau Studio City. While there have been other recent public comments that suggested to us that there would, indeed, be a casino at Macau Studio City, this is the most direct acknowledgement we’ve seen to date. That being said, we wouldn’t be surprised if conflicting government commentary on MSC were to continue over the coming weeks and months even after this seemingly direct acknowledgement.
Melco Crown (MPEL): New government comments seem positive for MSC gaming
August 22 2012
New government comments seem positive for MSC gaming - Macau’s Secretariat for Economy and Finance, Francis Tam, recently gave certain comments to local Portuguese media that appear incrementally positive to us with respect to the ability for Melco Crown to operate a casino at Macau Studio City (MSC). To date, most official government commentary has generally been along the lines of “there is no casino at MSC,” in reference to the project’s various applications submitted to the government. However, the secretariat’s recent comments are more reflective of what we’ve believed to be the case all along: that Melco Crown’s MSC is in the same position as all the other planned Cotai projects, namely that the company will need to apply for its gaming positions when the time is appropriate – just like all of the other casino operators. Recall that not one of the six planned casino-resort projects on Cotai have been granted a single table game at this stage of the development process.
Melco Crown (MPEL): 2Q12 recap; good news on Macau Studio City
August 07 2012
2Q12 recap; good news on MSC construction - Melco Crown reported 2Q12 results today. The company reported adjusted EBITDA of $204mm, which was below both our estimate of $209mm and the Street at $217mm. The downside came primarily from Altira, where VIP gaming volumes were down 23% y/y, and hold, while within the normal range, was at 2.7% vs. 3.1% in the prior year quarter.
With respect to Macau Studio City, the project recently received its construction permit from the Macau government, allowing it to resume construction soon. This should put MPEL in the enviable position of being the second of six new Cotai resorts (one from each concessionaire) set to open beginning in 2015. Despite the property being located on the southernmost parcel of land on Cotai, we like it for a variety of reasons, including direct access to the Cotai immigration building, proximity to one of the Macau Light Rail stations, and allowing the company to target a broader subset of mass market customers. We remain confident that Macau Studio City will be granted the necessary approvals to operate a casino, while the government of Macau will make enough table games available to support this and the other new supply on Cotai.
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.
Melco Crown (MPEL): Macau Studio City site work might suggest approval forthcoming
May 07 2012
Yesterday afternoon (Sunday, 6 May 2012), we visited Melco Crown’s Macau Studio City (“MSC”) site. Over a very short period of time, likely about two weeks, the company has begun putting up on-site construction offices. The first of what appears to be two blocks of construction offices is in the interior fit-out stage, while the second is currently going vertical. We believe the capex on these buildings, which would have required governmental approval (building permit, construction, etc.), is likely to be US$5mm+.
MSC casino approval forthcoming? - The on-site construction offices at MSC would seem to imply that 1) the company feels it might be close to moving forward with the resumption of construction in the near-term and 2) that perhaps an agreement has (or will soon be) reached with the government in terms of approving the site for gaming.
Melco Crown (MPEL): A solid 4Q11
February 09 2012
4Q11 recap - MPEL reported 4Q11 net revenue of $998mm (+29% y/y) and above our expectations of $966mm. Adjusted EBITDA was $232mm (+73% y/y) relative to our expectations of $200mm (Figure 1 in attached PDF). As noted above, higher hold (good luck) positively impacted EBITDA by approximately $32mm, suggesting adjusted EBITDA based on normalized hold was $200mm. This would also represent a $5mm sequential increase in EBITDA from the hold-adjusted $195mm in 3Q11.
Altira - Property-level net revenues were up 9% y/y, to $268mm (vs. consensus of $283mm), while EBITDA increased 15% y/y to $53mm (vs. consensus of $57mm. VIP rolling chip volume was $12.1bn, which represented a sequential decline of 8% from $13.2bn in 3Q11 as the property moves its operators to a revenue share model. Ultimately we think this could represent a great focus on Cotai, which should see outsized visitation growth relative to Macau and Taipa in 2012. VIP hold percentage at Altira 2.9% and within the normalized range of 2.7% to 3.0%. Mass market drop was $145mm (-4% sequentially), while hold was above the high end of the expected range at 17.5%.
City of Dreams - Property-level net revenues were up 42% y/y, to $696mm(vs. consensus of $685mm) and EBITDA increased 91% y/y to $187mm (vs. consensus of $168mm). VIP rolling chip volume increased 32% y/y, to $20.4bn and was up 50bps sequentially. VIP hold percentage was 3.0 % and at the high end of the expected range. Mass market drop was $811mm (+42% y/y, +11% sequentially). Mass market hold was 25.7% and towards the high end of the expected range of 23% to 26%. Finally, slot revenue increased 10% y/y, to $33mm but was down 4% sequentially.
Mocha Clubs - Mocha Clubs slot revenues grew 38% y/y to $34.5mm, and were up 10% on a sequential basis. EBITDA of $8.9mm was up 19% y/y and up 15% sequentially. We would attribute the y/y and sequential increases to the opening of the new Mocha Macau Tower location. 1Q12 will benefit from the recent opening of a new club at Golden Dragon.
Melco Crown (MPEL): The Street has MPEL wrong; 2012 expectations too low
January 18 2012
Center of gravity - There appears to be a growing consensus that an as-of-yet undefined “center of gravity” is shifting to Cotai, from the Macau peninsula. We decided to explore this concept and what it could mean to 2012 expectations. What we found is that 1) despite the chorus of analysts suggesting 2012 is the breakout year for Cotai, their expectations reflect otherwise; and 2) the Street has MPEL wrong (consensus expectations for top-line growth are too low).
Recent trends suggest it’s more or less a fair-share game - While acknowledging that visitation to Cotai is indeed growing, we believe this is due to increased supply rather than some fundamental behavioral shift causing visitors to treat the Macau peninsula as if it were Asia’s version of Downtown Las Vegas. Based on 2H11 results, which captures the new supply at Galaxy Macau, we do not think there is evidence of a shift in customer behavior manifesting in an increased gravitation towards Cotai and away from the Macau peninsula. We do, however, see evidence of Cotai taking market share away from the Macau peninsula based on an increased number of gaming positions – and we expect this trend to continue with the phased opening of Sands China’s Cotai Central.
We estimate that during 2H11 Cotai had 24% of the market’s VIP tables and 34% of its mass tables. Based on our 2H11 forecasts for the operators with Cotai exposure, we are forecasting their Cotai assets to produce nearly 26.5% of market-wide VIP GGR and 34% of mass market GGR. That is to say Cotai properties are punching a little above their weight in terms of VIP win / table and are inline with their fair share in terms of mass market win / table. While we do think that Sands China’s Cotai Central will give visitors another reason to spend more time on Cotai (further enhancing it as a mass market destination), we believe at least a few more IRs are needed in order to achieve the critical mass necessary for visitors to make a conscious choice between visiting only the Macau peninsula or only Cotai.
Macau slot parlor restrictions to take effect in March
January 16 2012
New regulations that restrict slot parlors from operating in residential areas will be in place by the end of March and the government has determined (as we had expected) that only two slot parlors will face closure under the new guidelines. These two slot parlors are Melco Crown’s Mocha Marina Plaza and SJM Holdings’ Yat Yuen Canidrome Slot Lounge, both of them located on the Macau peninsula. The government will work together with the casino operators to establish a timeline for the parlors’ closure.
The new regulations state that slot parlors must be located within a 500 meter radius of a casino, or must otherwise be located in existing commercial buildings (apparently the Macau Canidrome notwithstanding).
Virtually no impact to 2012 EBITDA - We believe the closure of these two slot parlors will have virtually no impact on our forecasted 2012 EBITDA for both Melco Crown and SJM Holdings. We estimate that the Mocha Marina Plaza, one of MPEL’s nine Mocha clubs, contributes approximately one-half of one percent (0.5%) to EBITDA, the loss of which should be more than offset by the recently opened Mocha Macau Tower (4Q11 being the first full quarter of operations). Further, we believe that Melco Crown has identified another potential development site for an additional Mocha Club facility. With respect to SJM, we estimate the Yat Yuen Canidrome Slot Lounge represents significantly less than 1% of our 2012 EBITDA forecast.
Melco Crown (MPEL): Macau moving forward with slot parlor restrictions
November 01 2011
The government of Macau has indicated that legislation banning slot parlors from operating in residential areas is nearly complete and that they will work with slot parlor operators in regards to the timing of any closures. We believe that only one of MPEL’s nine Mocha Club locations is at risk for closure, the loss of which should be more than made up for by the recent September opening of Mocha Macau Tower. Further, while the new legislation would also ban any new slot parlors from opening in purely residential areas, we believe MPEL may have identified another parcel (separate from the recently opened Macau Tower location) for development of another Mocha Club facility.
Slot parlors regulation in the final stage - The government is now ready to move forward with the slot parlor legislation which will not allow any slot parlors to be located within a residential area, which is generally defined as any location that does not fall within a 500 meter radius of a casino. It would appear that slot parlors located in hotels or commercial buildings would also be exempt from the ban. There are about a dozen slot parlors in operation, nine under MPEL’s Mocha Club brand, and another three under SJM’s (880 HK) flag. We believe the new legislation could lead to the closure of at least one of the slot parlors (MPEL’s Mocha Marina Plaza), while the government has also indicated that it might consider the closure of SJM’s slot parlor at the Canidrome (dog track) if there is enough public support (this represents significantly less than 1% of our 2012E EBITDA forecast for SJM).
Melco Crown (MPEL): Breakthrough 2Q11; raising estimates on new baseline
August 23 2011
2Q11 recap - MPEL reported 2Q11 net revenue of $960.0mm (+67% y/y) and above consensus expectations of $925mm. Adjusted EBITDA was $216.3mm (+195%) relative to consensus expectations of $165mm. As noted above, slightly higher hold (good luck) impacted EBITDA by approximately $30mm (~$7mm at CoD and $23mm at Altira).
Altira - Property-level net revenues were up 35% y/y, to $230.6mm, while EBITDA increased 99% y/y to $73.1mm. VIP rolling chip volume was $13.2bn (+39% y/y & +4% sequentially). VIP hold percentage was 3.1%, or above the expected range of 2.7% to 3.0%. VIP revenue of $409mm was up 35% y/y. Mass market drop was $148mm (+93% y/y & +6% sequentially), while hold was at the midpoint of the expected range at 15.8%. Mass market revenue of $23.3mm was up 68% y/y.
City of Dreams - Property-level net revenues were up 97% y/y, to $607.9mm and EBITDA increased 253% y/y to $151.3mm. VIP rolling chip volume increased 58% y/y and was up 3% sequentially, to $19.3bn. VIP hold percentage was 2.8%, or inline with the expected range. VIP revenue was $540mm (+101% y/y, +15% sequentially). Mass market drop was $751mm (+55% y/y, +16% sequentially). Mass market hold was 23.6% and within the expected range of 22% to 25%. Finally, slot revenue increased 30% y/y and 9% sequentially, to $35mm.
Mocha Clubs - Mocha Clubs slot revenues grew 20% y/y to $32.4mm, but were down 4% on a sequential basis. EBITDA of $11.3mm was up 42% y/y and down 11% sequentially.
Macau mass market shares by operator / property (early July)
July 20 2011
By operator - During the first two weeks of July, Sands China led the market with a weighted share of customers of 34.0%, followed by SJM Holdings (33.3%), Galaxy Entertainment (17.5%), Wynn Macau (6.3%), MGM China (4.9%) and Melco Crown (4.1%).
By property - The top three shares belong to Venetian Macao (21.5%), the combination of SJM’s Grand Lisboa / Lisboa (18.1%) and Sands Macao (12.5%). We would also call attention to Galaxy Macau’s market share, in the number four position at 12.0%. This compares to its share of table games of slightly less than 9%, suggesting that the recently opened property is garnering more than its fair share of customers. This market share is 150bps higher than our estimated market share of customers for Galaxy Macau during the survey covering the last two weeks of June (10.5%).
Melco Crown (MPEL): We think Macau Studio City WILL have a casino
July 07 2011
Local Macau media reports MSC casino not approved - Local Macau media is reporting (via Macau’s Secretary of Transport and Public Works) that Macau Studio City’s 2008 land grant did not explicitly include a provision for a casino. While this could technically be true, we do not believe MPEL would have entered into the recently announced MSC transaction without assurances from the Macau government (at the highest levels) that the project would be allowed to move forward with a casino and that table caps would not become an impediment.
We would be buying here -We think shares are being unfairly penalized for what we believe is a nuanced answer by a government official. Recall that MPEL Co-Chairman and CEO Lawrence Ho, at the recent MSC media event, alluded to the land grant issue saying that there were items that needed to be addressed within the land grant, but that the Macau government has given MPEL its blessing and support for the MSC project to include a casino.
MSC transaction details - Melco Crown announced an agreement whereby the company will acquire a 60% equity interest of the entity developing Macau Studio City on Cotai. MPEL is acquiring the stake controlled by eSun Holdings for $260mm, and will ultimately pay New Cotai Holdings $100mm (New Cotai Holdings will retain its 40% interest in the project). We believe that only Silver Point Capital and Oaktree Capital Management will remain in the New Cotai Holdings entity. The $360mm total consideration to be paid by MPEL for a 60% stake suggests a $600mm valuation for the project. Please see our note “Announces majority equity stake in Macau Studio City” from 16 June 2011 for more information.
Macau mass market roundup; shares by operator / property
June 30 2011
By operator - Over the period 10 June through 27 June, Sands China led the market with a weighted share of customers of 37.5%, followed by SJM Holdings (28.4%), Galaxy Entertainment (16.8%), Wynn Macau (6.1%) and Melco Crown (5.0%).
By property - We would call attention to Galaxy Macau’s market share, which has averaged 10.5%. This compares to its share of gaming positions of slightly under 9%, suggesting that the property is garnering more than its fair share of customers. Further, we note that Galaxy Macau’s market share of customers is 14% at the Ferry Terminal (the primary entry point for Hong Kong customers), which indicates to us that the company’s marketing blitz in Hong Kong has been successful in driving traffic to the property (recall that Galaxy Entertainment launched in Hong Kong the largest marketing campaign ever for a new casino in Macau).
Melco Crown (MPEL): Announces majority equity stake in Macau Studio City
June 16 2011
This morning Melco Crown announced an agreement whereby the company will acquire a 60% equity interest of the entity developing Macau Studio City on Cotai. MPEL is acquiring the stake controlled by eSun Holdings for $260mm, and will ultimately pay New Cotai Holdings $100mm (New Cotai Holdings will retain its 40% interest in the project). We believe that only Silver Point Capital and Oaktree Capital Management will remain in the New Cotai Holdings entity. The $360mm total consideration to be paid by MPEL for a 60% stake suggests a $600mm valuation for the project.
The stock outperformed its peers in recent weeks as talk of a potential Macau Studio City solution increased, suggesting that the market should like this transaction, especially if the project can ultimately be developed at a reasonable cost (around $2bn or less). This project not only gives MPEL a growth pipeline in Macau, but it positions the company to potentially be the first to open its doors relative to the concessionaires who are still waiting on final Cotai land approvals from the Macau government. LVS / Sands China will open its sites 5/6 beginning in early 2012, which should represent the last new supply coming online over the near term. The issue of the table cap should not be relevant for the Macau Studio City project as the cap will have expired (in 2013) prior to the project opening.
Short interest up for large gaming operators and suppliers
March 25 2011
Short interest data has been released for the period ending 3/15/2011. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
Large / mid cap operators
The universe of large / mid cap operators collectively has 8.5% of its free float short (LVS 1.9%, MPEL 4.4%, WYNN 4.0%). Over the past month, short interest for the group has increased sequentially (+9.1%), with operators: LVS –26.6%, MPEL +23.7%, WYNN +7.6%.
Regional operators
The universe of regional operators collectively has 12.2% of its free float short (ASCA 4.2%, BYD 31.9%, ISLE 7.7%, MCRI 2.5%, MNTG 0.2%, PENN 6.4%, PNK 11.1%). Over the past month, short interest for the group has decreased sequentially (-1.6%), with operators: ASCA +16.3%, BYD -6.0%, ISLE +16.6%, MCRI +8.7%, MNTG +48.4%, PENN +5.6%, PNK -0.6%.
Gaming suppliers / lottery
The universe of gaming suppliers / lottery has 6.4% of its free float short (BYI 12.8%, IGT 6.3%, WMS 8.9%, SHFL 3.4%, GCA 2.4%, MGAM 4.2%, SGMS 6.6%). Over the past month, short interest for the group has increased sequentially (+5.2%), with suppliers: BYI +29.2%, IGT 0.0%, WMS +0.7%, SHFL +2.2%, GCA +9.1%, MGAM +13.6%, SGMS +1.9%.
Macau stocks off on inflation concerns; unfounded but don’t fight the tape
February 11 2011
For most of the last five trading sessions, listed Macau casinos have sold off with an average un-weighted decline of nearly 8%. While quarterly results and company-specific drama has created noise, the group has notably under-performed broader emerging Asian markets which are off low-to-mid single-digits. Galaxy -16%, Wynn Macau -10%, Naga -8%, Sands China -6%, MPEL -4% and SJM -2%.
Macau gaming revenue up 32% to MOP18.6bn (US$2.3bn) in January
February 01 2011
Macau released January gaming revenues Tuesday, which were up 32%, to MOP18.6bn (US$2.3bn). This level of revenue was roughly inline with our expectations for another near-record month (October and December 2010 were each slightly below MOP19.0bn). The comp was difficult at +62%.
Gaming short interest down for operators and suppliers
November 10 2010
Short interest data has been released for the period ending 10/31/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 15.1% of its free float short (LVS 13.6%, MGM 25.3%, MPEL 2.5%, WYNN 8.5%). Over the past month, short interest for the group has declined sequentially (-11.9%), with operators: LVS -6.5%, MGM -15.8%, MPEL 23.7%, WYNN -14.0%.
The universe of regional operators collectively has 11.1% of its free float short (ASCA 5.9%, BYD 28.3%, ISLE 10.5%, MCRI 3.3%, MNTG 0.2%, PENN 3.4%, PNK 11.1%). Over the past month, short interest for the group has declined sequentially (-1.1%), with operators: ASCA -10.5%, BYD -5.8%, ISLE -5.9%, MCRI -4.5%, MNTG 60.2%, PENN 10.8%, PNK 11.5%.
The universe of gaming suppliers / lottery has 5.1% of its free float short (BYI 10.2%, IGT 4.7%, WMS 7.9%, SHFL 3.8%, GCA 2.5%, MGAM 4.0%, SGMS 4.6%). Over the past month, short interest for the group has declined sequentially (-8.2%), with suppliers: BYI -2.9%, IGT -3.1%, WMS -4.3%, SHFL -10.1%, GCA -19.7%, MGAM 0.2%, SGMS -32.6%.
Macau thoughts following Central Gov meeting in Beijing
November 09 2010
On a trip to Beijing last week we participated in a small group meeting with Minister Wang Guangya, new Director of the Hong Kong and Macau Affairs Office of the State Council. The Director is an extremely high ranking Chinese official. As it relates to Macau, the Director is responsible for all affairs of the Special Administrative Region (SAR) on behalf of the Chinese Premier. He is the conduit to China's Central Government for Macau's Chief Executive, Fernando Chui Sai On.
We found the Director's message with respect to Macau to be piercingly clear and direct. With a backdrop of protectionism for Macau's population his intent is to foster greater economic diversity in Macau, particularly via horizontal means. He will support development and investment that is complimentary to gaming in an effort to make Macau less vulnerable to another financial crisis (global, Asian, Chinese or otherwise). We believe the Director's message ties nicely with China's proposed, 12th 5-year program (2011-2015) which stresses economic development and social improvement, to be adopted in Spring 2011.
Melco-Crown (MPEL): Post 3Q10 conf call thoughts; new estimates
November 02 2010
MPEL reported 3Q10 net revenue of $727.0mm ( 45.3%) compared to consensus of $629.5mm. Adjusted EBITDA was $136.3mm ( 145.0% vs. $55.6mm in 3Q09) compared to the Street consensus of $100.1mm. Finally, earnings per ADS was $0.03, while the Street was forecasting a loss of $0.01. During the quarter, MPEL benefited from favorable rolling chip hold percentage, thus on a normalized hold basis (2.85%), EBITDA would have been $100mm, in-line with the Street consensus.
Short interest down for operators and suppliers
October 27 2010
Short interest data has been released for the period ending 10/15/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 16.2% of its free float short (LVS 14.6%, MGM 26.9%, MPEL 2.9%, WYNN 9.4%). Over the past month, short interest for the group has declined sequentially (-6.8%), with operators: LVS -2.3%, MGM -10.2%, MPEL 28.4%, WYNN -9.6%.
The universe of regional operators collectively has 11.2% of its free float short (ASCA 6.3%, BYD 29.0%, ISLE 10.8%, MCRI 3.3%, MNTG 0.1%, PENN 3.5%, PNK 10.9%). Over the past month, short interest for the group has declined sequentially (-5.7%), with operators: ASCA -19.5%, BYD -7.5%, ISLE -12.2%, MCRI -10.5%, MNTG 4.1%, PENN -3.1%, PNK 4.7%.
The universe of gaming suppliers / lottery collectively has 5.4% of its free float short (BYI 9.8%, IGT 4.9%, WMS 8.0%, SHFL 4.0%, GCA 2.7%, MGAM 3.9%, SGMS 6.1%). Over the past month, short interest for the group has declined sequentially (-9.5%), with suppliers: BYI -12.2%, IGT -7.6%, WMS 4.0%, SHFL -12.8%, GCA -18.5%, MGAM -11.7%, SGMS -19.2%).
Short interest up for big cap operators, down for the rest
October 13 2010
Short interest data has been released for the period ending 9/30/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 19.1% of its free float short (LVS 15.8%, MGM 38.3%, MPEL 2.0%, WYNN 10.0%). Over the past month, short interest for the group has increased sequentially ( 2.8%), with operators: LVS 9.3%, MGM -0.6%, MPEL -1.4%, WYNN 12.9%.
The universe of regional operators collectively has 11.3% of its free float short (ASCA 6.7%, BYD 30.2%, ISLE 11.8%, MCRI 3.5%, MNTG 0.1%, PENN 3.1%, PNK 10.0%). Over the past month, short interest for the group has declined sequentially (-10.0%), with operators: ASCA -15.4%, BYD -7.9%, ISLE -16.9%, MCRI -6.5%, MNTG -15.1%, PENN -18.3%, PNK -9.2%.
The universe of gaming suppliers / lottery collectively has 5.6% of its free float short (BYI 10.4%, IGT 4.8%, WMS 8.2%, SHFL 4.2%, GCA 3.0%,
MGAM 4.0%, SGMS 6.8%). Over the past month, short interest for the group has declined sequentially (-11.2%), with suppliers: BYI -4.0%,
IGT -15.9%, WMS 11.2%, SHFL -12.3%, GCA -18.8%, MGAM -13.1%,
SGMS -17.9%).
Short interest up for both operators and suppliers
September 13 2010
Short interest data has been released for the period ending 8/31/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 18.6% of its free float short (LVS 14.4%, MGM 38.5%, MPEL 2.0%, WYNN 8.8%). Over the past month, short interest for the group has increased sequentially ( 8.0%), with operators: LVS -2.9%, MGM 13.9%, MPEL -18.1%, WYNN 27.5%.
The universe of regional operators collectively has 12.5% of its free float short (ASCA 7.9%, BYD 32.8%, ISLE 13.8%, MCRI 3.7%, MNTG 0.1%, PENN 3.8%, PNK 11.0%). Over the past month, short interest for the group has increased sequentially ( 17.7%), with operators: ASCA 30.2%, BYD 25.0%, ISLE -6.8%, MCRI 4.4%, MNTG -17.0%, PENN 7.5%,
PNK 10.3%.
The universe of gaming suppliers / lottery collectively has 6.3% of its free float short (BYI 10.8%, IGT 5.8%, WMS 7.4%, SHFL 4.8%, GCA 3.7%, MGAM 4.6%, SGMS 8.3%). Over the past month, short interest for the group has increased sequentially ( 9.9%), with suppliers: BYI 3.4%, IGT 15.3%, WMS 3.5%, SHFL 2.6%, GCA 10.3%, MGAM 9.8%, SGMS 9.5%).
Short interest flat sequentially for operators and down for suppliers
August 25 2010
Short interest data has been released for the period ending 8/13/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 17.3% of its free float short (LVS 15.3%, MGM 33.5%, MPEL 1.7%, WYNN 8.8%). Over the past month, short interest for the group has declined sequentially (-3.8%), with operators: LVS 1.2%, MGM -2.2%, MPEL -63.7%, WYNN 22.7%.
The universe of regional operators collectively has 11.5% of its free float short (ASCA 7.3%, BYD 27.9%, ISLE 14.0%, MCRI 3.6%, MNTG 0.2%, PENN 3.9%, PNK 11.1%). Over the past month, short interest for the group has increased sequentially ( 13.7%), with operators: ASCA 32.1%, BYD 15.6%, ISLE -26.0%, MCRI 4.0%, MNTG -10.2%, PENN 59.9%, PNK 10.1%).
The universe of gaming suppliers / lottery collectively has 5.7% of its free float short (BYI 9.8%, IGT 5.1%, WMS 7.0%, SHFL 4.6%, GCA 3.2%, MGAM 4.1%, SGMS 7.7%). Over the past month, short interest for the group has declined sequentially (-6.0%), with suppliers: BYI -22.6%, IGT 1.7%, WMS -10.3%, SHFL 0.1%, GCA -9.0%, MGAM -4.8%, SGMS -4.4%).
Short interest flat sequentially for operators and down for suppliers
August 11 2010
Short interest data has been released for the period ending 7/30/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 17% of its free float short (LVS 15%, MGM 34%, MPEL 2%, WYNN 7%). Over the past month, short interest for the group has increased nominally ( 0.3%) on a sequential basis (LVS -1%, MGM 7%, MPEL -43%, WYNN -16%).
The universe of regional operators collectively has 11% of its free float short (ASCA 6%, BYD 26%, ISLE 15%, MCRI 4%, MNTG 0%, PENN 4%, PNK 10%). Over the past month, short interest for the group has declined 2% sequentially (ASCA -7%, BYD 4%, ISLE -41%, MCRI 5%, MNTG 15%, PENN 49%, PNK -7%).
The universe of gaming suppliers / lottery collectively has 6% of its free float short (BYI 10%, IGT 5%, WMS 7%, SHFL 5%, GCA 3%, MGAM 4%, SGMS 7%). Over the past month, short interest for the group has declined 13% sequentially (BYI -28%, IGT -11%, WMS -12$, SHFL 1%, GCA -11%, MGAM -6%, SGMS -10%).
Melco-Crown (MPEL): Post 2Q10 conference call thoughts; new estimates
July 29 2010
MPEL reported 2Q10 net revenue of $573.6mm ( 166%) compared to our estimate of $560.8mm and consensus of $556.2mm. Adjusted EBITDA was $73.4mm (vs. a loss of $23.8mm in 2Q09) compared to UGR at $87.0mm and the Street at $84.5mm. Finally, earnings per ADS were a loss of $0.06, while both UGR and the Street were forecasting a loss of $0.03. Adjusting for a bad debt provision ($9mm), EBITDA would have been $82.4mm, or slightly below both UGR and the Street.
We are forecasting total revenues and EBITDA of $520.1mm and $87.8mm (from $87.4mm) for 3Q10. For the full year 2010, we are forecasting $2.2bn in revenue and $339.5mm in EBITDA (from $351.5mm). For the full year 2011, we are forecasting $2.3bn in revenue and $401.3mm in EBITDA (from $393mm).
Short interest up sequentially for operators and down for suppliers
July 27 2010
Short interest data has been released for the period ending 7/15/2010. Below, we present this data for US-listed large / mid cap operators, the regional operators and gaming suppliers / lottery.
The universe of large / mid cap operators collectively has 18% of its free float short (LVS 15%, MGM 34%, MPEL 5%, WYNN 7%). Over the past month, short interest for the group has increased 7% sequentially (LVS -4%, MGM 15%, MPEL 13%, WYNN -10%).
The universe of regional operators collectively has 10% of its free float short (ASCA 6%, BYD 24%, ISLE 19%, MCRI 3%, MNTG 0%, PENN 2%, PNK 10%). Over the past month, short interest for the group has increased 4% sequentially (ASCA -21%, BYD 15%, ISLE -4%, MCRI -6%, MNTG 7%, PENN -15%, PNK flat).
The universe of gaming suppliers / lottery collectively has 6% of its free float short (BYI 13%, IGT 5%, WMS 8%, SHFL 5%, GCA 4%, MGAM 4%, SGMS 8%). Over the past month, short interest for the group has declined 4% sequentially (BYI -17%, IGT -8%, WMS 4%, SHFL -9%, GCA 9%, MGAM 6%, SGMS 31%).
Chinese currency appreciation very positive for Macau
June 21 2010
China's central bank has signaled it may finally allow its currency to appreciate against the dollar, ultimately making the U.S. and others more competitive with China. Since the Hong Kong dollar / Macau Pataca are pegged to the USD and given the majority of play in Macau is from mainland Chinese, the conversion of their renminbi has important implications for Macau.
This would be a very positive development for Macau and each of the gaming operators in that market. Essentially any appreciation of China's currency against the USD creates buying power for Chinese in Macau where HKD and Patacas are used by VIP and the mass market. Players essentially will have more capital (magnitude depends on amount of appreciation over time), losses become more affordable, working capital velocity likely plays a role in these incremental volumes as well, and perhaps limits on hard currency for offshore travel will ease (mass market).
Melco Crown (MPEL): Intra quarter update; raising estimates
May 21 2010
We are raising our numbers for the balance of 2010 in conjunction with our updated view on the market (HK$14bn per month) and a recent conversation with the company. We expect MPEL to continue to deliver quarterly EBITDA in the range of roughly US$90m for the balance of 2010. We are currently forecasting 2010 EBITDA of $351m, which is above current consensus at $342m and 2011 EBITDA of $393m vs. consensus at $381m.
There are a confluence of structural changes at City of Dreams which are manifesting in a longer length of play, which in turn has resulted in a higher hold percentage. These include: 1) the property’s full complement of hotel rooms are now online; 2) the gaming floor has been favorably reconfigured; 3) now benefiting from a sizable player database relative to none upon opening; 4) more focused marketing campaigns. Overall property hold has also benefited from 2,000 bps increase in penetration of walk-in traffic (playing vs. looking).
Honeymoon Ending in Macau? A Look at Recent PBOC Actions
January 14 2010
China’s central bank, The People’s Bank of China (PBOC) unexpectedly tightened monetary policy earlier this week using a favored tool of raising the reserve requirement ratio (RRR). The increase was the first since June 2008 which then capped a cycle of 20 increases totaling 1,050 bps beginning in mid-2006. During the central bank’s late December 2009 quarterly meeting Monetary Policy Committee members noted that despite the upturn in China the economy lacks internal forces to sustain the recovery.
Members communicated plans for 2010 to maintain a proper balance between support for economic development, and managing inflation, highlighting the importance of continuing relatively easy monetary policy. However, the market immediately interpreted the move as a change in posture by China to more of a tightening stance (and stocks with Macau gaming exposure felt it disproportionately) in order to cool credit and asset growth which has been driven by looser monetary policy (underscored by RRR easing from September 2008 onward).