WE ARE RAISING 1Q10 ESTIMATES for Melco Crown Entertainment (MPEL), Las Vegas Sands ( LVS) and Wynn Resorts (WYNN) based on Macau gross-gaming revenue and channel-checked market share year-to-date
Melco, a pure play in Macau, currently trades for 10.5 times CY10 and 9.1 times CY11 EV/Ebitda, a steep multiple discount to its U.S. peer group with exposure to Macau, even though those competitors have exposure to slower growth or no growth markets. The company's higher weighting of VIP play has been cited in the past as a primary reason for the market discount.
We continue to believe the company's discount to its comp group has been overly punitive and also note that Melco has been the fastest gainer of mass-market dollars in the past several months in Macau. Melco has increased its City of Dreams mass drop to a run rate of $45 million MOP per day from approximately $25 million MOP per day since its opening in June 2009. Outside of the increased mass drop, we further believe there has been a sustainable increase in mass-hold percentage, largely as a result of longer-play visits by patrons. Looks Good for a couple of points. Any comments??