Nov. 8 (Bloomberg) -- Melco Crown Entertainment Ltd., a venture between billionaire James Packer and a son of gambling tycoon Stanley Ho, said third-quarter profit fell as high-stakes Chinese gamblers curbed spending amid a slowing economy.
Net income fell 7.4 percent to $104.9 million from $113.3 million, based on U.S. accounting standards, according to a statement to the Hong Kong Stock Exchange yesterday. That was higher than a $93.4 million average estimate from nine analysts compiled by Bloomberg.
Adjusted earnings before interest, taxes, depreciation and amortization fell 5.8 percent to $226.4 million, and net revenue fell 4.3 percent to $1.01 billion. Earnings per American depositary share fell to 19 cents from 21 cents.
The decline reflects a pullback by high-rollers, or VIP bettors, from China’s mainland, even as mass-market betting gained. Melco and rivals such as Galaxy Entertainment Group Ltd. are expanding on Macau’s increasingly popular Cotai strip to reach more middle-class Chinese tourists.
Melco Crown fell 1.3 percent to HK$38.30 in Hong Kong trading, while the benchmark Hang Seng Index dropped 2.4 percent.
Chief Executive Officer Lawrence Ho said on a conference call yesterday that he’s “optimistic” about growth in 2013, and that the first few days of November were “phenomenal.” Melco maintained its market-leading mass-market yields, he said.
So-called rolling chip volume, a measure of VIP gambling, fell 4 percent to $19.5 billion in the third quarter, Melco said. Mass-market table-games drop gained 22 percent to $889.8 million and slot-machine handle surged 54 percent to $816.3 million, it said.
International casino operators are ramping up expansion in Macau.
Ho and partner James Packer’s Crown Ltd., Australia’s biggest casino owner, opened their second Macau casino, City of Dreams, on the Cotai Strip in June 2009 and renamed and rebranded their smaller Crown Macau as the Altira.
Macau’s Public Works & Transport department in July gave Melco Crown approval to build a five-star hotel and film production facilities on a 130,789 square-meter (1.4 million square-foot) site earmarked for the company’s Studio City project, according to a government gazette.
Sands plans to invest at least $2.5 billion to build its fifth resort, to be called “The Parisian,” in the Asian hub.
Wynn Macau won a land grant from Macau’s government in May to build its second casino in the former Portuguese colony. MGM China Holdings Ltd. and SJM Holdings Ltd. have also been given approval to develop casinos in Cotai.
Melco expects the first and second phases of its joint venture casino in Manila to open by the first half of 2014, Ho said on yesterday’s conference call.
While Melco’s board decided not to pay a dividend now to focus on its development pipeline, it will revisit the issue in a year’s time, Ho said.
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