MPEL: STUDIO CITY BACK IN PLAY?

Rumblings from Macau that the project might be back on. 

 

 

Maybe eSun Holdings and New Cotai have finally got their act together?  We’re hearing that is the case and there may be an announcement that the project will resume.  Industry followers may recall that MPEL was chosen to manage this Studio City casino on Cotai.  The project never got underway because of financing issues and partner disagreements.  The situation came to a head last year as eSun and New Cotai sued each other.

 

Our view is that any progress on the project would be a huge positive for MPEL.  As it stands now, MPEL will not commit any capital or be responsible for any expenses.  They will, however, manage the casino, contribute the subconcession, and receive a management fee.  The Studio City site is a good one on Cotai and if developed right, could be a very successful property.  We wouldn’t rule out some sort of equity contribution or financing from MPEL which makes the recent refinancing announcements timely but that wouldn’t necessarily be a bad thing.

 

No commentary on the timeline but it does appear that the forces are mobilizing.  Add Studio City to the positive MPEL catalysts which include a booming Macau and big April market share gains for MPEL, and a discounted valuation.  Somewhat offsetting these positives is competition from Galaxy Macau opening on Cotai in mid-May and potentially too aggressive whisper expectations for MPEL’s Q1.


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