Hedgeye - MPEL Q2 2015 CONFERENCE CALL NOTES

Net revenue Q2 2015 was $916.8 million, (24%) YoY from US$1,199.5 million
Despite Low hold in premium mass, they are happy with their ability to hold their share.
July is showing stronger signs relative to recent trends. Especially on the mass side
Hotel occ has remained at nearly 100%, relative to the market that is very strong
Cost control has been very consistent, and has aided margins
Studio city continues to create job opportunities for the local community and has been very well received.
Integrated resort will serve as a growth catalyst.
Location of Studio city is prime, with close proximity to the lotus bridge.
Ex. gaming operations continues to serve as a great compliment for customers.
Studio city will include a number of attractions never before seen in Macau.
1,600 rooms, 350k sq/ft of retail space, and 30 fnb options
Manila continues to expand across all segments
Leads Philippines in visitation and occ
Rolling chips segment generated 2.5x the prior period as junket efforts start to ramp up
The decline in net revenue was primarily attributable to lower rolling chip revenues and mass market table games revenues in Macau
Offset by the net revenue generated by City of Dreams Manila, which started operations in December 2014.
Q2 2015 Adjusted property EBITDA $204.9 million vs. Adjusted property EBITDA of $313.6 million Q2 2014.

Net revenue of $654.2 million vs. $967.5 million in 2014
City of Dreams generated Adjusted EBITDA of US$179.0 million (38%) YoY
Rolling chip volume totaled $11.1 billion vs. $22.1 billion in the second quarter of 2014. The rolling chip win rate was 2.7% in both quarters ended June 30, 2015 and 2014.
Handle of $1,116.7 million vs. $1,511.4 million Q2 2014.
Non gaming revenues of $28.6 million
low hold impact of $20 million in EBITDA
50 mm in costs expect to realize
Corp expenses to remain flat with prior q.

Q3 guidance

CoD Manilla - building lease payment = $7 million

Utilization capacity for tables?

Not a real meaningful way to look at it at this point. Due to their contribution to Macau they would be very upset to receive 150 table allocations. But do not expect it.

Optimistic about their contribution of non gaming attractions as a factor for the govt. to be generous?

Yes we are, see themselves as a model citizen and this should help them with the govt going forward.

Given assumptions on tables, how do you plan to allocate the tables? Will it be similar to CoD?

Table number to drive the decisions. But the shift in VIP tables to the Mass side plays a factor. The floor set up is very flexible to shift their lay out.
As of now it's tough to say since they do not
Look to bring over the high end premium feel to Studio City from CoD

CoD more table shifting?

See the level as quite optimum right now at CoD and Altira. Not looking to make more changes in terms of floor lay out

Macau at a bottom?

July looking stronger. Transit visa is a huge sentiment shift. Prior to that there had been only negatives surrounding Macau.
VIP, structurally, will never be what it once was.
Lower comps going into 2H and 2016, should be very helpful.

Focus of Studio City? Lots of foot traffic will mean a shift towards mostly mass and premium mass clientele?

Studio City offers far more flexibility because of the other attractions and the experience we will offer.
Efficiency and experience they gained from Cod and Altira will assist the opening of Studio City.

$50 million in savings? How?

Combo of a number of initiatives. Will not be split evenly. Could see more at CoD than Altira. But the savings will be widespread. Savings should be more back end loaded.

Market shifting to mass? what makes mass successful? what are the drivers?

MPEL has a been a pioneer for premium mass.
Lots of hotel rooms helps. but that's mostly for grind mass.
Service combined with rooms really assists the premium mass, extra restaurants, bars, etc.
Premium mass client is very sophisticated and needs the additional amenities

Seeing other competitors extending credit for premium mass players and comped rooms?

Have heard some things in the past. but for the most part them and all the competitors have been very rational

Number of tables you can operate at Altira?

Reduced tables for VIP. Altira should be more resilient in terms of rolling chip volume, relative to mkt
Key is more on the optimization of the small junket operators

How can you ramp up CoD Mannilla?

Being careful with who they choose as Junket operators. Bring on another Junket operator in late summer. Must be cautious about credit.

Beyond VIP, what should we think of the rest of the market in Manila?

Very happy with the product they have built so far. The trick is the same. Grow the database and continue to monetize the database and visitation. Lots of work to be done but the early signs are great.