Casino operator Melco Crown Entertainment (MPEL) will likely post strong results for 16Q4 as a result of Studio City ramp up and a rebound of City of Dreams, said a note from Morgan Stanley on Sunday.
The brokerage said it expects MPEL to report 5 percent quarter-on-quarter EBITDA growth, ahead of the industry average, due to: a lower base for COD in 16Q3; continued ramp up at Studio City (EBITDA +11 percent); and better luck in its Manila operations.
The brokerage estimates net profit to rise to US$79 million in 16Q4, up from $12 million in 15Q4, while an EBITDA of $1.1 billion is expected in the quarter.
It also raised its EBITDA estimates for MPEL in 2017 and 2018 by 9 percent and 10 percent respectively, driven by Altira/Studio City.
“We believe that more infrastructure (Taipa Ferry Terminal, Hengqin high speed train, and more traffic through Lotus Bridge) over the next three years could drive significant upside to our estimates and consensus for Studio City,” said the analysts.
Studio City EBITDA is forecast to reach $253 million in 2017, while the City of Dreams Manila will generate EBITDA of $156 million in 2017, they said.
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