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Melco Crown Entertainment Limited Message Board

  • mrtaxx mrtaxx Jul 23, 2013 7:44 PM Flag

    The Single Best Pure Play On The 'Las Vegas Of China


    Google the above title for the whole article
    Melco Crown Entertainment (MPEL) is the absolute best pure play on the Macau gaming market, generating 100% of its revenue from the region.

    Other major casino operators have a presence in Macau, including Las Vegas Sands (LVS), MGM Resorts (MGM) and Wynn Resorts (WYNN), but their revenues are diluted by their exposure to Las Vegas and other U.S. markets. Vegas Sands gets 52% of EBITDA (earnings before interest, taxes, depreciation and amortization) from Macau, while MGM receives 33% and Wynn earns 74%.

    Melco Crown's Prospects In Asia
    For American gamblers, Macau is more of a planned destination trip than a weekend getaway, like a quick trip to Vegas. As a result, any impact from legalized online gambling or the emergence of casinos across the U.S. will affect Melco much less than it would, say, Las Vegas Sands or Wynn.

    The majority of Macau's visitors are from mainland China. Enter China's rapidly rising middle class, which is already larger than the entire U.S. population and will likely be the key driver of Macau's growth. Back in 2000, only 4% of China's households were considered middle class. That number had soared to 66% by last year.

    Melco is also looking to be the industry leader in Manila, the capital of the Philippines, with plans to build one of the first casinos in the area next year. There will be an all-Asian lineup in Manila , where the four casinos scheduled to be completed next year are the work of China-based companies and Asian billionaires.

    Up until now the majority of the casinos in the Philippines have been run by the government. This is about to change, as Melco and other operators look to further tap the fast-growing Asian gambling market. The Filipino market is expected to attract both China's high rollers and Asia's rising middle class.

    The Philippines' annual revenues could easily reach $3 billion by the end of 2015, which would be closing in on the Vegas Strip and Singapore markets, which both bring in about $6 billion in gambling revenue a year.

    Although Melco's share price has soared 125% during the past 12 months, it is still trading at only 13.5 times operating cash flow, which is in line with Las Vegas Sands and well below Wynn's 23.4 times.

    Action to take -- The beautiful thing about casinos is that they operate in a highly insulated and regulated industry. As well, the business is capital-intensive -- Melco's Philippines casino is expected to cost more than $1 billion.

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    • Agreed.

      So, I'm selling my LVS and putting it in MPEL and GXYEF. LVS always seems to disappoint and I am thru with the shares for that reason, amongst others. But I will probably continue to dabble buying with LVS call options. You selling any LVS? You have to admit, mr t, they sure have stunk it up, all the way from bad earnings, to bad CC's to bad publicity (lawsuits, etc.)

      We already know MPEL is best as it is a pure Macau play, and now elsewhere in Asia, and no anti-USA sentiment to affect it like WYNN, LVS and MGM.

      FD: I do have some MGM because of their position of coming off the floor. GL


      Sentiment: Strong Buy

13.05-0.05(-0.38%)Aug 26 4:00 PMEDT