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

    Melco Crown Entertainment Ltd. (MPEL) develops, owns and, through its subsidiary Melco Crown Gaming, operates 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 (28-June-11) FY 

    2009

    FY 

    2010

    %  

    Chg

    Q1 

    2010

    Q1 

    2011

    %  

    Chg

    Symbol MPEL Revenue, $Mn 1,332.87 2,641.98 98.2% 567.61 806.59 42.1%
    Current price $11.97 Gross marg. 13.2% 23.6% 78.8% 22.9% 20.9% -8.7%
    52wk Range: $3.56-$12.06 Oper. margin 3.4% 4.5%
    Avg Vol (3m): 8,652,860 Net margin -23.1% -0.4% -98.3% -2.2% 0.89 -140.5%
    Market Cap. 6.38B
    Shares Outstanding 532.81M EPS, $ -23.1% -0.4% -98.3% -0.01 0.00 -100.0%

    Source: Reuters.com, SEC Filings.

    Recent News

    MPEL shares gained after the Macau casino operator announced its acquisition of a majority stake in the developer of Macau Studio City project almost two weeks ago.  Sterne Agee & Leach analyst David Bain, who kept a Buy rating and $17.85 price target on MPEL stock, said it was good move for the Company because Macau Studio City has the best location on the Cotai Strip. Macau Studio City is a large scale integrated gaming, retail and entertainment resort to be developed in Macau jointly by MPEL and New Cotai Holdings LLC, an entity controlled by funds managed by Silver Point Capital L.P. and Oaktree Capital Management L.P.

    MPEL said it would pay the affiliate of eSun Holdings $260 million for its 60% interest in the Cyber One Group, the developer of the Macau Studio City project, and will also pay New Cotai $100 million in cash in three installments over two years commencing upon the closing of the transactions. New Cotai will retain its 40% indirect equity interest in the Cyber One Group.

    “We remain bullish on Macau’s prospects and believe high quality new supply, such as Macau Studio City, will continue to drive incremental demand and broaden the appeal of the market,” commented MPEL co-chairman and CEO Lawrence Ho. “The project’s location is a tremendous competitive advantage, adjacent to the Lotus Bridge and a key stop on the planned light rail system. Additionally, we believe Macau Studio City’s existing land grant and previously completed site work will allow us to significantly expedite its construction timetable.”

    MPEL traded near its 52-week high of $12.06 in yesterday’s session, on volume of more than 4 million shares.  The stock is currently trading above its 50-day moving average of $10.77 and above its 200-day moving average of $8.39.

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

    Financial Summary

    MPEL reported net revenue of $806.6 million for the first quarter of 2011, up 42% from the same period last year. The Company attributed the increase 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 $0.01 a share, for the first quarter of 2011, compared with a net loss of $12.5 million, or a loss of $(0.02) a share, reported for the same period in the previous year. MPEL’s quarterly earnings, however, missed analysts’ expectations by $0.05.

    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.

    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%.

    Financial Strength (28-June-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 1.30 3.98 0.47 0.71
    Current Ratio (MRQ) 1.32 4.18 0.61 1.03
    LT Debt to Equity (MRQ) 61.70 19.91 20.13 137.21
    Total Debt to Equity (MRQ) 71.11 23.07 32.32 182.98
    Interest Coverage (TTM) 0.06 0.28 18.03

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among 16 polled investment analysts. Against the Melco Crown Entertainment Ltd company.

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

    The 15 analysts offering 12-month price targets for MPEL have a median target of 12.80, with a high estimate of 17.85 and a low estimate of 3.65. The median estimate represents a 10.06% increase from the last price of 11.63.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Jun-11 3 831.47 897.10 760.00 605.40
    Quarter Ending Sep-11 3 831.55 900.25 765.00 614.00
    Year Ending Dec-11 16 3,342.13 4,655.31 2,604.00 2,538.47
    Year Ending Dec-12 16 3,686.66 4,751.69 2,704.00 2,828.57
    EARNINGS (per share)
    Quarter Ending Jun-11 2 0.04 0.06 0.01 -0.02
    Quarter Ending Sep-11 2 0.04 0.06 0.01 -0.02
    Year Ending Dec-11 16 0.20 0.37 -0.04 -0.04
    Year Ending Dec-12 16 0.34 0.58 -0.02 0.09
    LT Growth Rate (%) 2 -261.09 -196.49 -325.70 -236.73

    Technical Analysis

    Source: http://stockcharts.com

    MPEL is trading above its 20-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 presently near its upper Bollinger Band. This suggests that it is at a high level relative to recent action.

    The MACD for MPEL currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    June28-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Wynn Resorts Ltd. WYNN 138.99 17.20B 32.17 26.83 3.43 3.13
    MGM Resorts International MGM 12.93 6.32B n/a n/a 1.02 0.97
    Las Vegas Sands Corp. LVS 41.84 30.27B 24.61 18.93 3.42 2.84
    Resorts & Casinos Median 31.48 n/a 1.16 n/a
    Melco Crown Entertainment Ltd. (ADR) MPEL 11.92 6.35B 54.18 33.11 1.91 1.74

    Source: Thomson Financial

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