MPEL: AN ENCORE PERFORMANCE?

Well, not quite Wynn Encore but MPEL should put up its second straight estimate beating quarter.

The stock has been on a tear and justifiably so.  Macau is booming and MPEL has held its own in terms of market share.  The Galaxy Cotai is a big overhang and MPEL is at risk.  However, Q1 estimates also look low.  For Q4, we are expecting MPEL to deliver another strong quarter, beating Street expectations.  We project revenues of $776MM and EBITDA of $143MM, 8% and 22% ahead of consensus, respectively.

We estimate that City of Dreams (CoD) will report net revenues of $504MM and EBITDA of $111MM, ahead of consensus by 18% and 14%, respectively.  Below are some of the details behind our estimates:

• VIP net table win of $328MM
  • Assuming 15% direct play, we estimate that CoD’s Rolling Chip (RC) grew 58% YoY reaching $14.7BN.
  • Hold was above normal at 3.1% - much higher than last year’s low 2.4% hold
• Mass table win of $127MM, up 70% YoY and 14% sequentially
• Slot win of $36MM
• Non-gaming revenues of $43MM and promotional expense of $29MM
  • Non-gaming expenses of $17MM
• Variable expenses of $316MM, consisting of taxes, gaming premiums, junket commissions and doubtful accounts
• Fixed expenses of $60MM compared to $55MM in 3Q2010 – we’re assuming some ramp for the Dragone show

For Altira, we estimate net revenue of $243MM and EBITDA of $40MM,--20% and 30% above consensus, respectively.

• VIP net table win of $324MM
  • We estimate that Altira’s RC volume grew 31% YoY reaching $11.65BN - the best quarter since pre-CoD opening
  • Hold was normal at 2.8% but much higher than last year’s low 2.3% hold
• Mass table win of $23MM, more than double last year’s number.  We understand that Altira has introduced an SJM-like model on its floor for Mass – offering large rebates to players.
• Variable expenses of $180MM, consisting of taxes, gaming premiums, junket commissions and doubtful accounts
• Fixed expenses of $21MM

Other Stuff:

• Mocha slots: $29MM revenues and $8MM Of EBITDA
• Depreciation: $63MM
• Amortization: $19MM
• Interest expense: $28MM