• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Look for MPEL to beat even recently revised Q2 EBITDA estimates tomorrow. The bigger story is how much Q3 needs to go up (20%).


MPEL Proposed Dual Listing on HK Exchange (Aug 4)

  • We believe our proposed dual listing on the local bourse will not only put us on a par with our competitors, but will also provide our existing shareholders with much enhanced liquidity, while providing us with access to an additional source of capital. A dual listing on the SEHK will also allow local and Asian investors to directly access investment opportunities in our Company, thus broadening our investor universe."
  • According to a Dow Jones source, MPEL is looking to raise $400-600MM for its HK IPO.  The source also said the IPO would launch in Q4.

MPEL Announced Successful Completion of the Acquisition of a 60% Interest in the Developer of the Macau Studio City Project (July 27)

  • Successful completion of the acquisition of a 60% equity interest and shareholder loan in the developer of Macau Studio City, a large scale integrated gaming, retail and entertainment resort to be developed in Macau jointly by MCE and New Cotai Holdings, LLC ("New Cotai Holdings"), an entity controlled by funds managed by Silver Point Capital, L.P. and Oaktree Capital.
  • Signing of a shareholders' agreement for Cyber One Agents Limited (together with its direct and indirect subsidiaries, the "Cyber One Group") with an affiliate of New Cotai Holdings. New Cotai Holdings retains its 40% indirect equity interest in the Cyber One Group.
  • Will open with 300 to 400 gambling tables and 1,200 slot machines, pending government approval. The project would cost a further US$1.7 BN (MOP13.6 BN).  It will include 2,000 hotel rooms, 200,000 square feet of retail space and entertainment offerings.
  • The tentative deadline to open the property is the first half of 2015.

Melco Crown Gaming (Macau) Limited Closes Refinancing (July 1)

  • The refinancing credit facilities ("New Facilities") are for approximately US$1,200 million
    • Amortizing term loan facility for the equivalent of approximatelyUS$800MM ("Term Loan Facility") for the purpose of partially refinancing existing debt and the payment of associated fees, costs and other expenses and a revolving credit facility for the equivalent of approximately US$400MM ("Revolving Credit Facility") to fund the partial refinancing of existing debt, certain maintenance capital expenditure and general working capital purposes. The Term Loan Facility has been fully drawn and the balance of the Revolving Credit Facility will be available for drawdown in Hong Kong dollars, each bearing interest at HIBOR plus a margin.
  • Although the pricing terms of the New Facilities are higher than the pricing terms of the City of Dreams Project Facility, we believe they are in line with market pricing terms. 
  • The term of the New Facilities is five years

Youtube from Q1 Conference Call

  • “Our customer database now has over 650,000 members and continues to grow, further allowing us to strategically target profitable customers now and in the future. GGR in Macau has continued to show strong growth with a year-over-year increase in April of 45% and May is off to a good start. As such, we continue to see upside in both our mass market and VIP gaming revenues as well as incremental revenue growth from our non-gaming operations for the remainder of the year.”
  • “The House of Dancing Water continues to sell out and remains at breakeven on a standalone basis while continuing to contribute to our casino, food and beverage, and hotel segments. With the addition of Cubic, as well as the opening of the Hard Rock Café scheduled for year-end, we believe that our entertainment offerings will continue to differentiate City of Dreams and drive visitation and revenue.”
  • “Depreciation and amortization expense is expected to be approximately $85 million. Corporate expense is expected to come in at approximately $20 million to $22 million. Net interest expense is expected to be approximately $30 million. We do not expect any meaningful pre-opening expense or capitalized interest in the second quarter of 2011.”
  • “We believe that the Galaxy opening is great for Macau and it’s even better for Cotai. We’ve seen traffic hold up at our property quite well; if anything, it’s increasing quite a bit.”
  • “Given the state of the site of Macau Studio City, if the two shareholders were to restart construction, I think it certainly would have a head start over some of the other sites that haven’t even gotten land approvals yet.”
  • [CoD development space] “It’s probably unlikely that the government will approve apartment hotels, after all they have been looking at it for the past five years. So I think the latest design that we have looked at is, really potentially looking at doing adding additional hotel rooms, being a pure hotel, it’s a big project because to give you a comparison, Altira is only 1 million square feet and the developable space at City of Dreams, which we call Phase III now, is 1.5 million, so, with 500,000 potentially in the podium and 1 million in the hotel tower…. it could be another 800-plus room hotel tower.”
  • “I think operating leverage and margin is a continued focus of ours and since our main focus at City of Dreams is on the premium mass segment, we’ve been able to do that by turning off some of the marketing expenses.”
  • [CoD margin] “The margin is stable and other than a small increase from Cubic, stable going into the second quarter as well.”
  • “We view our hold percentage of mass to be something that is really not an anomaly of luck at the table, that’s really a reflection of improvements in the experience that we’re providing to our gaming customers. So, it’s not normalized because we view that as being something that’s sustainable going forward.”