May 11, 2015

MCP reports net loss of P3.09b in 1Q15

Melco Crown (Phils) Resorts Corp (MCP) posted a net loss of P3.09b in 1Q15. This is more than triple the P970m in net losses registered in 1Q14. This arose primarily from the huge increase in employee benefit expenses, depreciation and amortization, and other expenses even as revenues were weaker than expected. The interim results also included P1.23b in pre-opening costs. Net revenues reached P2.34b, including P1.95b in casino revenues.

Rolling chip win rate (calculated before discounts and commissions) was negative 0.8%. Mass market table games drop was P4.5b with a hold rate of 25%. The company also registered some P223m in room, food and beverage, and other revenues.

Our take: We were projecting that MCP will register a net income of P1.8b for the year (vs. the consensus forecast of P1.2b). Our numbers do not include pre-opening costs and we assumed that the City of Dreams Manila will be fully operational for the entire year.

However, the facility had a grand opening only last 2 Feb and it has yet to ramp up its VIP business. As such, the total revenues were equivalent to just 6.8% of our full-year forecast. While we believe that MCP will be able to ramp up operations especially for the VIP gaming segment, it may be difficult for the company to achieve our full-year revenue targets. We will review our numbers accordingly to incorporate the results. – WealthSec