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Too early to call stabilization in Macau market after MPEL results: WF

Melco Crown 15Q2 results were broadly in line with Wells Fargo expectations following soft results observed from Macau operators this earnings season. 

Analyst Cameron McKnight said management commentary was encouraging, “but we think it’s still too early to definitely call stabilization of the market.”

Melco Crown has found $50 million of operational cost efficiencies to help to offset broader market weakness, said McKnight.

“We are modestly revising our 2015/2016 EPS estimates from $0.42/$0.56 to $0.51/$0.57 and maintain our valuation range of $19-21. While we consider MPEL’s inexpensive valuation versus its peer group, low leverage, and new property openings this year as positives, continued Macau market uncertainty keeps us on the sidelines in the near term.”

City of Dreams’ earnings before interest, taxes, depreciation, and amortization of $179 million was 2 percent below Wells Fargo’s estimate and 9 percent below consensus. 

“The miss relative to consensus was related to lower VIP volume and mass market table revenues.”

Mass market table drop was down 10 percent year-on-year to $1.2 billion and VIP hold was normal. Results were impacted by $20 million of unfavorable hold on Premium Mass - similar to Wynn's results last week.  


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