MPEL 1Q2010 REVIEW

Property results were a little better than we projected. In this note we break down the numbers in a way the company will not.

 

MPEL reported property EBITDA slightly ahead of our estimate. In our preview, we forgot to model in corporate expense, so on the surface this appeared to be a miss. However, adjusting for our own mistake, MPEL reported a solid quarter; however, it was still below what the Street had hoped for. 

Since the company refuses to make our lives easy by breaking out win % and other data between the properties, we thought it would be valuable to estimate the breakdown for our clients based on our assumptions and proprietary database.

1Q2010 DETAILS

City of Dreams:

  • Net revenues were $11MM below our estimate, while EBITDA was $3MM better than we estimated
  • Lower net revenues versus our estimate of $347MM were driven by slightly lower gross casino revenues but were more than offset by slightly better hold percentages on mass drop and VIP RC
  • We estimate that the VIP win was $297MM and that hold was 3.03% 
  • We estimate that mass win was $98.5MM with a win % of 20.5%
  • Slot win percentage was 5%
  • We estimate that net casino revenues were $324MM and that the vast majority of the promotional expenses were at Altira
  • We estimate that fixed expenses (excluding costs for non-gaming revenues, taxes, gaming premuims, junket commissions and doubtful accounts) were roughly $51MM
  • If we use the midpoint of the MPEL's range for mass and VIP win percentages, EBITDA at CoD would have been roughly $56MM for the quarter
  • We project that CoD will do $255MM of EBITDA in 2010
  • For all the fuss over table caps, CoD removed 37 tables sequentially and 95 since opening

Altira:

  • Net revenues were $1MM below our estimate, while EBITDA was $2MM better than we estimated
  • We estimate that the VIP win was $274MM and that hold was 2.77% 
  • We estimate that mass win was $10MM with a win % of 14%
  • We estimate that net casino revenues were $193MM and that non-gaming revenues and promotional expenses were basically a wash
  • We estimate that fixed expenses (excluding costs for non-gaming revenues, taxes, gaming premuims, junket commissions and doubtful accounts) were roughly $20MM
  • Altira also reduced their table count by 18 tables q-o-q and by 44 tables from their peak table count in 4Q08
  • Interestingly, management said that better results were due to lower commissions. They also told us that fixed costs were lower than last year....the math doesn't quite work since Altira had roughly $10MM more in casino win this quarter compared to 1Q09 and hold percentage looks fairly close (it was 2.79% in 1Q09). Management explained that the variance is due to different hold percentages on the RC and revenue share. So if RC program junkets hold high it's a bigger drop to the bottom line than if revenue share junkets drop. The only issue we have is that 80% of their rooms are on RC programs - so the variance must have been spectacular. I guess we will have to make a leap of faith here since management won't disclose win % for their properties.
  • We estimate that Altira can do $84MM of EBITDA in 2010

Other stuff

  • Mocha slots revenue was in line with our estimate and EBITDA was $1MM lower, for 2010 we expect Mocha to contribute $25MM of EBITDA
  • SG&A was $3MM higher then we estimated, offset by lower stock comp and pre-opening expenses
  • Factoring in corporate expense this time, we expect 2010 EBITDA of $316MM