CONF CALL
- Macau still weak demand environment
- Control operating costs
- Gained RC volume share in 1Q
- Improved mass share in April
- Non-gaming entertainment - MPEL the leader
- Studio City: on budget, on time (targeting Q3 but not a hard target) - management seemed to hedge on this. We think a Q3 opening is not in doubt
- 79% of mgmt team are locals
- CoD Manila: customer database very strong. Hotel occupancy at 75%. Mass market strong. VIP junkets will open in coming months.
- Property EBITDA margin (including CoD) 24.3% compared with 28.8% in 1Q 2014, 25.1% in Q4 2014.
- Property Macau margins: 25.5% , unchanged QoQ
- Q1 2015 hold-adjusted EBITDA: benefited from $6m of better luck overall ($12m better hold at CoD offset by $6m lower hold at Altira)
- CoD building lease 1Q 2015: US$7m
- 2Q 2015 guidnace
- D&A: $110-115m
- Corp expense: $32m
- Consolidated interest expense: $40m ($11m relating to CoD Manila, $37m capitalized interest)
Q & A
- Govt has engaged with MPEL on gaming policy (e.g. smoking ban, tourist visa)
- CoD Manila: quite pleased with how it's tracking. Grand opening on Feb 2. Manila is a market where competitors are much more aggressive with regards to reinvestment rates. But promotions/giveaways have tapered down recently. Junket VIP now beginning to ramp up (big operator opening this weekend).
- Dividend policy: prudent in setting initial dividend policy. Comfortable maintaining dividend.
- Studio City: non-gaming attractions are different from CoD. Believe they will be profitable there as stand-alone.
- Sees further efficiencies on a EBITDA per table
- Doing a little bit better than Macau market on VIP contribution
- On a QoQ basis, saw increase in mid-tier premium mass segment. Comped 100 more rooms in Q1 in mid-tier premium mass segment to boost occupancy.
- Long-term outlook on Macau hasn't changed
- Macau Margins: had identified issue of VIP deterioration spreading to premium mass segment. In April, had best mass share in last 2 years
- Premium mass hold rate: quite happy
- Smoking ban impacted mass gaming floor. Mass Hold % averaged down with lower betting levels (due to changes to in mix of customers). Should be able to sustain mass hold % (seeing improvement in April)
- CoD & MSC have own non-recourse agreements. These debt deals make it very difficult to move tables from one property to the other.
- Has 2 out of the top 5 junket operators. Hopeful to add one more top 5 junket in Philippines. Had soft junket opening in April.
- CoD Macau: got table allocation 4-6 wks before opening
- Phillipines: longer-term could be another Vegas or Singapore.
