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Melco Crown won't show margin sustainability in 15Q2: Sterne Agee

Sterne Agee says Melco Crown Entertainment will not show quarter-on-quarter margin sustainability in 15Q2 in the same way Las Vegas Sands and Wynn Resorts did in their 2Q15 results.

Analyst David Bain said the reasons for this include Melco Crown’s employee count build-up, which is more intense than the others due to the proximity of its Macau Studio City opening. Another reason is Melco Crown “has already appropriately mined premium mass in previous quarters (versus WYNN converting junket VIP rooms to a higher percentage of cash rooms beginning early this year – MPEL has already done this).”

As of July 26, table market share results saw SJM at 20.1 percent, Galaxy at 23.1 percent, LVS at 23.8 percent, MPEL at 14.3 percent, WYNN at 9.3 percent, and MGM at 9.5 percent.

“Galaxy’s $2.5b Phase II opened May 27, 2016 with a table allocation of only 150 tables. Full Galaxy market share was 21.3 percent in 1Q15. Galaxy’s market share jumped to 22.9 percent from 21.0 percent as of July 13, we believe partly as a result of the opening of its new premium mass offering,” said Bain.

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