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Downgrades, unlucky play, and china stock market swoon have all pressured MPEL.  It’s now relatively cheap, and strong May volumes should lead to market share gains, assuming hold, well, holds.

MPEL hit a recent high of $5.53 on April 9th.  One month later, the stock is down 25% because of the China stock market decline and a few downgrades.  Good enough, damage done.  What now?

We think Macau is having a very good May.  VIP volumes are very strong and while Mass seemed to slow down toward the end of Golden Week, May revenues should increase nicely over last year; we estimate +60%.  More importantly, City of Dreams is off to a great start in May, particularly on the VIP side where we are hearing the property is generating strong volumes.  Market share could be going higher for MPEL.

The sentiment on MPEL is pretty negative.  This stock could experience a quick ride up if CoD posts market share gains in May.  The valuation has plenty of relative upside.  At 11x 2011 EBITDA, MPEL trades at a +20% discount to WYNN and LVS which assumes no share increase for MPEL.