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MPEL should report Q3 EBITDA above the Street 

We are projecting that MPEL will report $988 million of net revenue and $217 million of EBITDA, in-line and 2% ahead of consensus, respectively.  On a hold adjusted basis, our EBITDA estimate goes to $210 million, assuming 2.85% hold, and $211 million if we use the historical averages of Altira and City of Dreams.  This compares to the Street at $213 million which should be an estimate of absolute EBITDA.  Note that consensus EBITDA has climbed from $204 million in the past two weeks to $213MM, due in part to the slightly higher hold percentage. 

3Q Detail

We estimate that City of Dreams will report $740MM of net revenues and $198MM in EBITDA (2% above consensus)

  • Our net casino win projection is $720MM
    • VIP net win of $438MM
      • Assuming 15% direct play, we estimate $19.5BN of RC volume (down 4% YoY) and a hold rate of 3.14%
      • Using CoD’s historical hold rate of 2.91%, EBITDA would be $12MM lower and net revenues would be $43MM lower
    • $245MM of mass win, up 31% YoY
    • $38MM of slot win
  • $20MM of net non-gaming revenue
    • $22MM of room revenue
    • $13MM of F&B revenue
    • $21MM of retail, entertainment and other revenue
    • $37MMM of promotional allowances or 65% of gross non-gaming revenue or 5.1% of net gaming revenue
  • $429MM of variable operating expenses
    • $349MM of taxes
    • $67MM of gaming promoter commissions in addition to the rebate rate of 90bps (we assume an all-in commission rate of 1.24%)
  • $25MM of non-gaming expenses
  • $87MM of fixed operating expenses up 6% YoY and down $2MM QoQ

We project $215MM of net revenues and $31MM in EBITDA for Altira (1% above consensus)

  • We estimate net casino win $209MM
    • VIP net win of $281MM
      • $10.9BN of RC volume (17% YoY decrease) and a hold rate of 2.63%
      • Using Altira’s historical hold rate of 2.80%, we estimate that EBITDA would be $6MM higher and that net revenues would be $19MM better
    • $27MM of mass win, up 15% YoY
  • $3MM of net non gaming revenue
  • $153MM of variable operating expenses
    • $123MM of taxes
    • $27MM of gaming promoter commissions in addition to the rebate rate of 94bps (we assume an all-in commission rate of 1.19%
  • $3MM of non-gaming expenses
  • $28MM of fixed operating expenses in line with 1Q

Other stuff:

  • Mocha slots revenue and EBITDA of $34MM and $8MM, respectively
  • D&A: $95MM (guidance of $90-95MM)
  • Interest expense: $25MM (guidance of $23-25MM)
  • Corporate expense: $20MM (guidance of $18-20MM)