MPEL BLOWS Q2 OUT

Q3 should be even better on a hold adjusted basis.

 

 

MPEL reported $216MM in Q2 EBITDA, beating the Street’s Q2 EBITDA estimate by $41 million (24%).  Net revenues were spot in-line with our estimate (above the Street) but EBITDA beat us by 20%.  On a hold adjusted basis, Q2 EBITDA was $185MM.

 

Luck played a role in the strong quarter.  Altira VIP held at 3.1% versus a normal range of 2.7-3.0% which positively impacted EBITDA by $15 million.  Also, MPEL's properties held well on the volume junket business and less so on the revenue share which is a favorable scenario for profitability.  Mass finally held at a normal rate.  We had modeled $180 million with higher hold at Altira but not the favorable hold mix at the volume junkets.  We estimate each generated an incremental $15 million in EBITDA for a total of about $30 million.  Since we had modeled the former but not the latter, on an apples to apples basis, MPEL beat us by about $20 million. 

 

Clearly, hold was not the only story.  Margins were very strong even ex the hold dynamics.  The Mass mix was more favorable, which boosted margins.  It also appears that the company has reduced its cost structure.  In 1H11, they have been focusing more on the premium Mass business which has a little less promotional expense attached to it.  Promotional expenses were $11MM lower than we estimated and have been steadily declining as a % of casino revenue over the past 2 years  Dare we say that MPEL is moving toward industry type margins?  This would be significant for future EBITDA.

 

Going forward, with $185 million as a base and Q3 trending higher than Q2 on the revenue side, we think $190-195 million in Q3 EBITDA is a good, conservative range.  The Street is currently at $160 million.  If these margin gains are sustainable, we may be raising our estimates even further.

 

MPEL BLOWS Q2 OUT - ebitda

 

MPEL BLOWS Q2 OUT - rev


Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more