More comments by the Transportation Secretary but let’s be realistic.
We were just in Macau last week, a few days after Transportation Secretary Lau Si lo made his first comments regarding MPEL to stick to its original 2008 plans for Macau Studio City. Well, Mr. Lau made some more comments that seem to be spooking investors this morning.
While there may be concern among US investors, there doesn’t seem to be much concern in Macau. It is our understanding that the government approached many of the operators about taking over the project and gave assurances about gaming tables at the site. Lawrence Ho and MPEL had first dibs on the project and they took it. Would they really buy out ESun and commit capital to this project without a casino? Come on.
We think the government is just publicly showing its power. They certainly want to retain most of the original plan since it contained many appealing entertainment options and want to ensure those get developed. MPEL is completely on board with the original design including the Studio. The government is smart enough to know that MSC doesn’t get done without a casino.
Q2 looks very strong for MPEL and we are expecting a significant beat over consensus EBITDA of $146 million. As much as $180 million is possible in our opinion. We will have a better estimate after we go through the June property detail we just received this morning.
