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

    Melco Crown Entertainment Ltd. (MPEL) is a developer, owner and, through its subsidiary Melco Crown Gaming, operator of casino gaming and entertainment casino resort facilities. Melco Crown Gaming is one of the six companies licensed, through concessions or sub-concessions, to operate casinos in Macau.  MPEL currently operates Altira Macau (www.altiramacau.com) (formerly Crown Macau), a casino hotel located at Taipa, Macau and City of Dreams (www.cityofdreamsmacau.com), an integrated urban casino resort located in Cotai, Macau. The Company’s business also includes the Mocha Clubs (www.mochaclubs.com), which feature a total of approximately 1,600 gaming machines in eight locations and comprise the largest non-casino based operations of electronic gaming machines in Macau.MPEL was incorporated in 2004 and is based in Central, Hong Kong.

    Share Statistics (19-May-11) FY 

    2009

    FY 

    2010

    %  

    Chg

    Q4 

    2009

    Q4 

    2010

    %  

    Chg

    Symbol MPEL Revenue, $Mn 1,332.87 2,641.98 98.2% 400.22 773.75 93.3%
    Current price $10.43 Gross marg. 13.2% 23.6% 78.8% 10.7% 24.5% 129.0%
    52wk Range: $3.42-$11.11 Oper. margin 3.4% 6.1%
    Avg Vol (3m): 6,784,420 Net margin -23.1% -0.4% -98.3% -22.4% 2.1% -109.4%
    Market Cap. 5.55B
    Shares Outstanding 532.42M EPS, $ -0.21 -0.01 -95.2% -0.06 0.01 -116.7%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    MPEL traded near its 52-week high of $11.11 on Thursday, closing at $.10.43, on strong volume of over 25 million shares.  The Macau casino operator posted its results for the first quarter of 2011, reporting a swing to a profit on the strength of improvements in both its gambling and non-gambling operations at its Macau resorts.

    The Company posted first-quarter net revenue of $806.6 million, which is 42% higher from the same period last year. The increase can be attributed to several factors, including the continuing ramp up of the rolling chip, mass market and hotel operations at City of Dreams, contribution from The House of Dancing Water and substantial improvement in Altira Macau’s rolling chip volume.

    First-quarter adjusted EBITDA came in at $121.3 million, up from $86.9 million reported last year. The increase in adjusted EBITDA was due to substantial increase in gaming volumes and strict cost controls that drove operating leverage.

    MPEL reported net income of $7.2 million, or a penny a share, for the first quarter of 2011, compared with a net loss of $12.5 million, or a loss of 2 cents a share, reported for the same period in the previous year. MPEL’s quarterly earnings, however, missed analysts’ expectations by 5 cents.

    The Company said the continuing year-on-year improvement in bottom-line profitability was primarily driven by the significant improvement in both gaming and non-gaming fundamental operating performance at City of Dreams and Altira Macau, partially offset by increased depreciation and amortization expense primarily associated with the opening of The House of Dancing Water at City of Dreams and higher net interest expense related to the refinancing of about $600 million of bank debt through the issuance of a high yield bond in May 2010.

    “Our results from the first quarter of 2011 continue to illustrate our success in leveraging our high quality portfolio of assets, with record gaming and non-gaming revenues, synergies from our new management structure, and our focus on margin enhancement, which drive continuing improvement in operating leverage,  MPEL co-chairman and CEO Lawrence Ho commented in the release.

    As of March 31, 2011, MPEL had cash and cash equivalents totaling $704.3 million, which includes $145.5 million of restricted cash. The Company’s total debt at the end of the first quarter of 2011 was $1.80 billion, and total net debt to shareholders’ equity as of March 31, 2011 was 43%.

    Visit MPEL at http://www.melco-crown.com/eng/main.php

    Financial Strength (19-May-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 1.32 4.02 0.45 0.70
    Current Ratio (MRQ) 1.33 4.17 0.59 1.02
    LT Debt to Equity (MRQ) 64.87 20.56 18.30 149.96
    Total Debt to Equity (MRQ) 72.92 23.79 30.95 196.55
    Interest Coverage (TTM) 0.06 0.28 17.80

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among 18 polled investment analysts. Against the Melco Crown Entertainment Ltd company.

    Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
    Latest 8 3 6 1 0 0
    4 weeks ago 8 3 7 1 0 0
    2 months ago 8 3 7 1 0 0
    3 months ago 8 2 6 1 0 0
    Last year 3 1 4 3 0 0

    The 16 analysts offering 12-month price targets for MPEL have a median target of 10.54, with a high estimate of 13.00 and a low estimate of 3.65. The median estimate represents a 4.31% increase from the last price of 10.10.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Jun-11 3 773.74 886.41 688.10 605.40
    Quarter Ending Sep-11 3 773.41 882.94 699.30 614.00
    Year Ending Dec-11 17 3,200.90 4,655.31 2,604.00 2,537.31
    Year Ending Dec-12 15 3,511.60 4,751.69 2,704.00 2,827.39
    EARNINGS (per share)
    Quarter Ending Jun-11 1 -0.03 -0.03 -0.03 -0.02
    Quarter Ending Sep-11 1 -0.02 -0.02 -0.02 -0.02
    Year Ending Dec-11 17 0.15 0.30 -0.04 -0.04
    Year Ending Dec-12 15 0.26 0.49 -0.02 0.10
    LT Growth Rate (%) 2 -253.89 -196.49 -311.30 -239.54

    Technical Analysis

    Source: http://stockcharts.com

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    May19-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Wynn Resorts Ltd. WYNN 147.01 18.19B 34.92 29.11 3.64 3.33
    Las Vegas Sands Corp. LVS 41.97 30.36B 24.69 19.16 3.44 2.86
    MGM Resorts International MGM 15.52 7.58B n/a n/a 1.23 1.17.
    Resort & Casinos Median 21.76 n/a 1.18 n/a
    Melco Crown Entertainment Ltd. (ADR) MPEL 10.43 5.55B 61.35 35.97 1.76 1.60

    Source: Thomson Financial

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