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And they played unlucky!

As we wrote about in our Macau preview notes (“MACAU MODEL UPDATES”, 1/6/13 and “MACAU: EXAMINING THE Q4 HOLD IMPACT”, 1/7/13), MPEL should report 4Q EBITDA well above the Street on an actual and hold adjusted basis.  The stock has had a phenomenal run so most of the beat is probably reflected.  However, if we’re right on our adjusted EBITDA projection, full year 2013 consensus needs to go higher as well.

We are projecting that MPEL will report $1,080MM of net revenue and $261MM of EBITDA, 2% and 10% ahead of consensus, respectively.  On a hold adjusted basis (using each property's historical hold rate), our EBITDA estimate goes to $272 million.    

Q4 DETAIL

We estimate that City of Dreams will report $772MM of net revenues and $227MM in EBITDA; impressive considering the low hold at the property.

  • Our net casino win projection is $752MM
    • VIP net win of $399MM
      • Assuming 15% direct play, we estimate $22.7BN of RC volume (up 11% YoY) and a hold rate of 2.66%
      • Using CoD’s historical hold rate of 2.91%, EBITDA would be $15MM higher and net revenues would be $53MM higher
    • $312MM of mass win, up 50% YoY.  A record for CoD.  Mass revenues reached a record $118MM in December alone and were also north of $100MM in November based on our estimates.
    • $41MM of slot win
  • $20MM of net non-gaming revenue
    • $24MM of room revenue
    • $16MM of F&B revenue
    • $24MM of retail, entertainment and other revenue
    • $44MMM of promotional allowances or 69% of gross non-gaming revenue or 5.8% of net gaming revenue
  • $433MM of variable operating expenses
    • $373MM of taxes
    • $47MM of gaming promoter commissions in addition to the rebate rate of 90bps (we assume an all-in commission rate of 1.11%)
  • $24MM of non-gaming expenses
  • $87MM of fixed operating expenses up 3% YoY and $2MM QoQ

We project $273MM of net revenues and $43MM in EBITDA for Altira

  • We estimate net casino win $270MM
    • VIP net win of $245MM
      • $11.8BN of RC volume (5% YoY decrease) and a hold rate of 3.01%
      • Using Altira’s historical hold rate from the last 11 quarters of 2.9%, we estimate that EBITDA would be $4MM lower and that net revenues would be $12MM lower
    • $25MM of mass win, flat YoY
  • $3MM of net non gaming revenue
  • $193MM of variable operating expenses
    • $149MM of taxes
    • $41MM of gaming promoter commissions in addition to the rebate rate of 94bps (we assume an all-in commission rate of 1.29%)
  • $3MM of non-gaming expenses
  • $33MM of fixed operating expenses in-line with 3Q

Other stuff:

  • Mocha slots revenue and EBITDA of $36MM and $9MM, respectively
  • D&A:  $94MM (guidance of $90-95MM)
  • Interest expense:  $22MM (guidance of $23-25MM)
  • Corporate expense:  $18MM (guidance of $18-20MM)