,Hong Kong

Melco Crown Entertainment's 3Q profit down 22% to US$237mn

It still beat consensus, though.

Melco Crown Entertainment's net revenue in 3Q15 was US$946mn, down 16% yoy but improving 3.2% sequentially.

According to a research note from Jefferies, further, adjusted property EBITDA was US$237mn, down 22% yoy (but improving 16% qoq), beating Jefferies and consensus by 15%/16%.

The report noted it was mainly benefiting from mass contribution in Macau and strong performance in CoD Manila. Meanwhile, net profit was US$33mn, improved 37% qoq, but was down 75% yoy. Dividend was US$1.8 cents/ADR; at 30% payout maintained.

Here's more from Jefferies:

Mass improved sequentially; CoD Manila was strong. Both VIP and mass business outperformed the market in Macau. Total VIP GGR dropped 36% yoy vs. an industry decline of 45%. Mass declined 19% yoy, but improved 8% qoq. Propertywise, City of Dreams (COD) outperformed the market with net revenue improved 2% but EBITDA improved 7% sequentially. CoD Manila continuing ramp up, EBITDA was US$24.4mn, nearly double from US$12.6 mn in the Q2.

Studio City had a good start Studio City opened on Oct 27, it added 200 gaming tables (another 50 will be ready by Jan 2016) and 1,233 slots in the casino. For the non-gaming offering, they have 1,600 hotel rooms, 35k sqm in retail space, and a 5,000 seat entertainment centre as well as a TV studio.

During the opening week, hotel bookings were over 90% and retail occupancy was 95%. Media reported the first 5 days of operation in Oct reached US$6mn in GGR, which does not seem as good as expected with its 200 tables, but it is too early to draw a conclusion as we believe new property always needs time to ramp up.

Expecting a better Q4; reiterate Buy. The $50mn cost saving plan is on track and expect to help the numbers in Q4. The pro-active talks on debt negotiation of Studio City will help to minimize the potential impact. We expect the Studio City to gradually contribute and the non-gaming elements will help the property to accelerate the ramp up speed.

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