CONF CALL
- Challenging period for Macau
- Gained market share in rolling chip
- Repositioning in larger, higher quality junkets for CoD and Altira
- MSC will open in 3Q 2015
- Property margin: 25.1% in 4Q 2014, 28.5% in 4Q 2013. 27.5% in 3Q 2014
- Luck-adjusted: $290m (25.8% margins)
- 85% of luck-adjusted EBITDA came from CoD
- Employee retention program in 4Q: required to increase retention by $5m (was not included in guidance)
- CoD Manila: from 1Q 2015, they will provide key operating metrics
- 1Q 2015 guidance:
- D&A: $110-115m
- Corp expense: $30m
- net interest expense $40 ($11m Manila cost, $30 of capitalized interest)
Q&A
- Why margins down so much: $5m incremental retention costs, operating leverage, lower mass market hold rates, lower entertainment revenues due to seasonality (more darker days)
- Mass market hold rate decline: need more time to do more research. Hold rate may have been influenced by length of play, which was hurt by smoking ban.
- Hit record levels in market share in mass and rolling chip volume share
- CoD: in terms of unit customers, was stable in 3Q and 4Q
- New macau govt review: non-gaming investment - MPEL feels very comfortable where they are.
- MSC hiring: started mass recruitment recently
- 2015 Macau GGR: revised down to 'slight negative YoY'
- CoD Manila: strong domestic market
- Mocha clubs: revenue decline due to smoking ban
- Concerned about full smoking ban in 2016
- Underutilized table capacity: continue to optimize table mix; happy to accept 200-300 new tables
- Studio City has capacity for 500 tables: MPEL believes they need 400 tables 'to make casino busy'.
- Altira: have created some of the nicest looking junket rooms. Will open 2 nice rooms before CNY 2015. January did well, particularly in Rolling Chip. Has 3 out of the biggest 4 junket operators in Macau.
- Smoking dispute: 100% comply with law
- VIP Table productivity difference between Altira and CoD: at this point, it is quite close as Altira's has improved.
- Mass table productivity has also closed between the two properties
- Promotional environment: reinvestment in existing players has been similar in Q4 and Q3, from MPEL's perspective
- MSC: will attract daytrippers