Stock Alert for Melco Crown Entertainment Ltd. (ADR)(MPEL)
  • Stock Alert for Melco Crown Entertainment Ltd. (MPEL)
  • Stock Alert for Melco Crown Entertainment Ltd. (MPEL)
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    Stock Alert for Melco Crown Entertainment Ltd. ($MPEL)

    Melco Crown Entertainment Ltd. (NASDAQ: $MPEL)

    Melco Crown Entertainment Ltd. (MPEL) is a developer, owner and, through its subsidiary Melco Crown Gaming, operator of casino gaming and entertainment resort facilities focused on the Macau market. Melco Crown Gaming is one of six companies licensed, through concessions or sub-concessions, to operate casinos in Macau. The Company owns and operates City of Dreams, Altira Macau, Mocha Clubs and Taipa Square Casino. Its other projects include City of Dreams Phase II, Macau Studio City Project and Macau Peninsula Site.

    The Company was formerly known as Melco PBL Entertainment (Macau) Ltd. and changed its name to Melco Crown Entertainment Ltd. in May 2008. Melco Crown Entertainment Ltd. was incorporated in 2004 and is based in Central, Hong Kong.

    Share Statistics (23-Apr-10) FY

    2007

    FY

    2008

    %

    Chg

    Q4 2008 Q4 2009 %

    Chg

    Symbol MPEL Revenue, $Mn 358.6M 1.42B 296.0% 253.5M 400.2M 57.9%
    Current price $4.94 Gross marg. 15.1% 17.0% 12.6% 19.4% 10.7% 44.8%
    52wk Range: $8.45-3.26 Oper. margin -54.6% 0.1% 100.2% -6.6% -18.4% 178.8%
    Avg Vol (3m): 8,067,780 Net margin -49.6% -0.1% 99.8% -7.5% -22.4% 198.7%
    Market Cap. 2.63B
    Dil. Shares Outst. 533.8M EPS, $ -0.44 -0.01 97.7% -0.04 -0.17 325.0%

    Source: Reuters.com, SEC Filings.

    Financial Summary

    For the fourth quarter of 2009, net revenue was US$400.2 million, an increase of approximately 60% from US$253.5 million for the comparable period ending December 31, 2008. The increase in net revenue was a result of the opening of City of Dreams in June 2009.

    Adjusted EBITDA was US$2.7 million for the fourth quarter of 2009, as compared with US$22.4 million in the fourth quarter of 2008. The year-over-year decrease in EBITDA in the fourth quarter of 2009 was primarily attributable to low table hold in the Company’s rolling chip operations and a temporary slowdown in rolling chip volume at Altira Macau.

    The Company-wide mass market table games hold percentage (non rolling chip) in the fourth quarter of 2009 was 17.5%, which is in-line with target hold percentage range of 16.0% to 18.0%.

    The combined rolling chip table games hold percentage (calculated before discounts and commissions) across City of Dreams and Altira Macau in the fourth quarter of 2009 was 2.4%, below expected rolling chip hold percentage range of 2.7% to 3.0%.

    On a GAAP basis, the Company recorded a net loss for the fourth quarter of 2009 of US$89.7 million, or US$0.17 per ADS, compared to a loss of US$18.9 million, or US$0.04 per ADS, in the fourth quarter of 2008. The year-over-year increase in the net loss was due to increased depreciation and amortization expenses and lower capitalized interest following the opening of City of Dreams, as well as the aforementioned lower than expected rolling chip hold percentage in the fourth quarter of 2009.

    City of Dreams 4Q Results

    For the quarter ending December 31, 2009, net revenue at City of Dreams was US$237.6 million and Adjusted EBITDA was US$22.2 million.

    Normalized to 2.85%, fourth quarter EBITDA would have been US$44.7 million.

    Rolling chip volume totaled US$9.3 billion for the fourth quarter of 2009 and mass market table games drop (non rolling chip) totaled US$423.3 million. Slot handle was US$372.8 million.

    On a sequential basis from the third quarter of 2009, rolling chip volume increased 3%, mass market table drop increased 9%, and slot handle increased 31% in the fourth quarter of 2009.

    Total non-gaming revenue at City of Dreams in the fourth quarter of 2009 was US$22.8 million. Occupancy per available room in the fourth quarter of 2009 was 79% and the average daily rate (ADR) was US$152 per occupied room.

    Altira Macau 4Q Results

    For the quarter ending December 31, 2009, net revenue at Altira Macau was US$132.7 million versus US$225.8 million in the quarter ending December 31, 2008. Altira Macau generated an Adjusted EBITDA loss of US$14.0 million in the fourth quarter of 2009 compared with an Adjusted EBITDA gain of US$25.7 million in the fourth quarter of 2008.

    Normalized to 2.85%, fourth quarter EBITDA would have been US$16.4 million.

    Rolling chip volume totaled US$8.9 billion for the fourth quarter of 2009, down from US$10.3 billion in the fourth quarter of 2008. In the mass market table games segment, drop (non rolling chip) totaled US$67.0 million in the fourth quarter of 2009, down from US$73.0 million generated in the comparable period in 2008.

    Total non-gaming revenue at Altira Macau in the fourth quarter of 2009 was US$7.7 million, down from US$9.0 million in the fourth quarter of 2008. Occupancy per available room in the fourth quarter of 2009 was 94% and the ADR was US$196 per occupied room. This compares with occupancy and ADR of 92% and US$238, respectively, in the fourth quarter of 2008.

    Mocha Clubs 4Q Results

    Net revenue from Mocha Clubs totaled US$25.0 million in the fourth quarter of 2009, up from US$22.4 million in the fourth quarter of 2008.

    Mocha Clubs generated US$6.2 million of Adjusted EBITDA in the fourth quarter of 2009, which compares with US$6.7 million in the fourth quarter of 2008.

    The number of gaming machines in operation at the Mocha Clubs averaged approximately 1,560 in the fourth quarter of 2009, an increase from an average of approximately 1,090 in the fourth quarter of 2008. The net win per gaming machine per day was US$174 in this period, as compared with US$223 in the same period in 2008.

    Other Factors Affecting Earnings

    Total non-operating expenses for the fourth quarter of 2009 were US$16.7 million, which included US$15.4 million in net interest expense and other finance costs of US$2.6 million. Capitalized interest during the fourth quarter of 2009 totaled US$5.5 million.

    Depreciation and amortization costs of US$71.2 million were booked in the fourth quarter of 2009, of which US$14.3 million was related to the amortization of the gaming sub-concession and US$4.8 million was related to the amortization of land use rights.

    Financial Position and Capital Expenditure

    Cash and cash equivalents as of December 31, 2009 totaled US$448.7 million, including US$236.1 million of restricted cash. Total senior secured debt at the end of the fourth quarter of 2009 was US$1.68 billion. Total debt to shareholders’ equity as of December 31, 2009 was 67%.

    Capital expenditures for the fourth quarter of 2009 were US$42.1 million, primarily attributable to City of Dreams.

    The target purchase completion date for the acquisition of the Macau Peninsula Site passed in the third quarter of 2009 and the acquisition agreement was terminated by the relevant parties in December 2009. The Company has been refunded its deposit in full.

    Full-Year Results

    For the full year ending December 31, 2009, the Company reported net revenue of US$1.33 billion versus US$1.42 billion in the full year ending December 31, 2008. The year-over-year decrease in net revenue was driven primarily by lower rolling chip volume and lower rolling chip hold percentage as compared to 2008.

    The Company reported a net loss of US$308.5 million for the 12 months of 2009, compared to a net loss of US$2.5 million for the twelve months of 2008. The net loss per ADS for the twelve month period ending December 31, 2009, was US$0.63 compared to a net loss per ADS of US$0.01 for the same period in 2008.

    Financial Strength (23-Apr-2010) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 1.37 5.70 0.66 0.75
    Current Ratio (MRQ) 1.39 5.91 0.82 0.91
    Long-Term Debt to Equity (MRQ) 69.92 18.71 27.06 143.40
    Total Debt to Equity (MRQ) 71.69 20.37 44.16 206.68

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    Buy Outperform Hold Underperform Sell No Opinion

    This is the consensus forecast amongst 13 polled investment analysts. Against the Melco Crown Entertainment Ltd company.

    Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
    Latest 4 2 5 2 0 0
    4 weeks ago 4 1 5 2 0 0
    2 months ago 4 1 5 2 0 0
    3 months ago 4 1 5 2 0 0
    Last year 3 2 4 1 0 0

    The 11 analysts offering 12-month price targets for MPEL have a median target of 5.00, with a high estimate of 7.00 and a low estimate of 3.04. The median estimate represents a 2.04% increase from the last price of 4.90.

    Source: www.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Jun-10 2 541.85 549.20 534.50 599.40
    Quarter Ending Sep-10 2 557.65 558.10 557.20 567.42
    Year Ending Dec-10 9 2,350.22 2,972.40 1,697.00 2,415.21
    Year Ending Dec-11 9 2,486.23 3,493.86 1,930.00 2,609.59
    EARNINGS (per share)
    Quarter Ending Jun-10 2 -0.04 -0.04 -0.04 0.05
    Quarter Ending Sep-10 2 -0.04 -0.03 -0.05 0.04
    Year Ending Dec-10 11 -0.10 0.00 -0.17 0.25
    Year Ending Dec-11 11 -0.07 0.00 -0.16 0.31
    LT Growth Rate (%) 1 -239.54 -239.54 -239.54 77.83

    Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=MPEL.O

    Investment Highlights

    MPEL, a developer and owner of casino gaming and entertainment resort facilities focused on the Macau market, recently announced that it was bestowed with the “Best Leisure Development in Asia Pacific” and “Best Leisure Development in China” awards at the International Property Awards 2010 for its flagship entertainment resort, City of Dreams.

    The International Property Awards, in association with Bloomberg Television, is the world’s largest property competition. The awards aim to identify the highest levels of achievement in property development, architecture and interior design and are world-renowned as a mark of excellence. In its 16th year, the Awards received entries from 19 countries in the Asia Pacific Region. City of Dreams is the first Macau resort property to be honored with this distinguished award, which recognizes distinctive innovation and outstanding success in leisure development.

    Source: http://www.melco-crown.com/eng/main.php

    Technical Analysis

    Source: http://stockcharts.com

    MPEL is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

    MPEL is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

    MPEL’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Apr23-2010 symbol Share, $ $ Mn 2009 2010 2009 2010
    Ameristar Casinos Inc. ASCA 18.54 1.07B n/a n/a 0.85 n/a
    Pinnacle Entertainment Inc. PNK 12.61 757.66M n/a n/a 0.68 n/a
    MGM MIRAGE MGM 16.11 7.11B n/a n/a 1.11 n/a
    Casino & Gaming Median 2.97B n/a n/a 0.88 n/a
    Melco Crown Entertainment Ltd. MPEL 4.94 2.63B n/a n/a 1.96 n/a

    Source: Thomson Financial

    Insider Trading Activity

    NET SHARES PURCHASE ACTIVITY

    Inside Purchases – Last 6 Months

    Shares Transaction
    Purchases n/a n/a
    Sales n/a n/a
    Net Shares Purchased (Sold) n/a n/a
    Total Insider Shares Held n/a n/a
    % Net Shares Purchased (Sold) n/a n/a

    Net Institutional Purchases — Prior Qtr to Latest Qtr
    Shares
    Net Shares Purchased (Sold) n/a
    % Change in Institutional Shares Held n/a

    Source: Yahoo Finance

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