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MPEL beats us and consensus but exactly in-line with our hold adjusted EBITDA estimate

"We have delivered yet another impressive quarter of operating results, with strong year-over-year improvements in operating metrics in our mass market segments at City of Dreams providing us with greater earnings stability, particularly during a period of slowing
market growth in the rolling chip segment."

- Mr. Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment


  • On track to open MSC in mid-2015
  • They have entered the syndication stage of their financing for MSC and are also contemplating a high yield financing once the bank debt closes.
  • MSC will have capacity for 500 tables and will focus on main stream mass customers. 
  • EBITDA in Manila will be allocated on a pro-rata basis. Expect both phases to open together in 2014.
  • Assuming a 2.85% hold, EBITDA would have been $210MM an 8% increase on a normalized basis.  Altira's luck adjusted EBITDA was $36MM. CoD was $180MM on a luck adjusted basis (+17% increase).
  • Mass contribution: 75% of their luck adjusted EBITDA (CoD) and 67% of their luck adjusted EBITDA (company-wide)
  • The contemplated high yield notes will not be guaranteed by Melco Crown
  • 4Q Guidance:
    • D&A: $90-95MM
    • Corporate: $18-20MM
    • Net interest: $23-25MM  


  • They are very positive on the Macau market headed into next year. The first few days of November have been quite phenomenal. 
  • Seeing some improvement compared to the last few months
  • Feel like they have one of the more exciting development pipelines in the gaming world: 2014 (Manila); 2015 (MSC), Tower 5 at CoD
  • In order for them to keep improving mass yields at CoD, they need to stay focused on their customers and keep up the quality of the property
  • Their yield on VIP tables is a little lower than some other properties in the market.  Hope to stabilize Altira over the next few quarters and expect to see improvement over the next few Q's.  They have been moving tables from Altira to CoD over the last few months.
  • Continue to examine ways to improve table productivity.
  • Studio City equity:  $825MM ($225MM completion guarantee).  First $800MM will go in pro-rata i.e. 60/40.  The remainder will go in a 100% funded by MCE, subject to the option for minority share holder to put in their 40% of that amount, but MPEL will know that in about six months.  So somewhere from zero to 40% of that incremental amount. 
  • Think that only they and Galaxy will be opening in 2015 and that other projects won't open before 2016
  • The first $150MM has already gone into the Manila project on a pro-rata 60-40 basis
  • Thoughts on dividends from Melco Crown next year and beyond?  They would love a dividend but the Board wants to make sure that the development pipeline are underway and fully funded before they consider dividend payouts. 
  • The shell is already built in Manila and they have been working on the deal for over a year.  What's built in Phase 1 is already set but they will try to make Phase 2 the iconic part of the project. They are happy with what has already been built. 
  • How much of their Mass business is premium Mass vs. "mass mass"
    • The premium mass is roughly 50/50 space wise
    • Margin wise, premium mass has a higher margin than regular mass since it's less competitive
  • Think that Altira's table optimization is almost done but its always a work in process in terms of tweaking the mass/VIP mix
  • Why do they need do to a Sr Note offering for MSC since they are almost net cash positive?  Financing structure at MSC reflects that they 1) don't own 100% of the project and 2) they have 2 other projects that they are working on. 
  • Anticipate spending about $600MM in Manila with $300MM funded through a local loan. 
  • Ph3 of CoD:  will be funded by cash and internally generated funds. Project cost won't be finalized until sometime next year but it will be significant given the huge SQFT.
  • Hold rate on slots also gets impacted on the mix of high roller slots and regular


  • Net revenue of $1,011MM and Adjusted EBITDA of $226MM, coming in 4% ahead of our estimates and 6% ahead of Street
    • CoD: Net revenue of $$737MM and Adjusted EBITDA of $204MM
    • Altira: Net revenue of $$216MM and Adjusted EBITDA of $30MM
  • "The... decline in Adjusted EBITDA .... was driven by lower group-wide rolling chip volumes together with a lower blended rolling chip win rate, partially offset by strong improvements in our mass market table games and gaming machine segments together with our ongoing commitment to control costs."
  • "Altira Macau's underlying operating performance has stabilized following the implementation of our successful table optimization strategy"
  • "In relation to Studio City, we have made significant construction progress, with our piling and foundation work nearly completed, and we have now engaged our main contractor on a fixed price contract basis, giving us greater certainty and control over the project's cost. We also reached a major milestone in relation to the funding for Studio City, with our senior secured credit facilities now in syndication following the recent signing of a commitment letter. We anticipate that our debt financing package, once finalized, together with cash equity contributions from the shareholders of Studio City, will provide us a fully funded project"
  • "Recently signed a cooperation agreement regarding the development and operation of an integrated entertainment and casino complex in the Philippines, further solidifying the key terms and conditions of this exciting development"
  • "Completed a consent solicitation on our existing senior notes which enabled us to, among other things, release an additional US$400 million from the restricted
    payments basket, giving us the ability to more efficiently use our available cash to fund our impressive development opportunities."
  • CoD: "Improvement in Adjusted EBITDA was primarily a result of strong improvements in the mass market segments, including a 30% year-over-year increase in mass table games gross gaming revenue, partially offset by a decline in rolling chip volumes"
  • Altira: "Decrease in Adjusted EBITDA was driven by a lower rolling chip win rate together with reduced rolling chip volumes."
  • Other:
    • Capitalized interest: $2.6MM
    • Cash: $2.1BN
    • Debt: $2.4BN
    • Capex: $107MM