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Melco Crown to Begin Paying Dividends as Earnings Rise

Feb. 14 (Bloomberg) -- Melco Crown Entertainment Ltd., the Macau casino venture of billionaire James Packer and Lawrence Ho, said it will begin paying dividends after posting a profit gain driven by bigger bets from high-stakes mass gamblers.

Melco Crown shares headed for the highest price in more than three weeks after the company said “significant earnings and cash flow” allow it to start the payouts. The stock climbed 1.1 percent to close at HK$110 in Hong Kong trading.

The company joins casino operators including Wynn Macau Ltd. and Sands China Ltd. in courting so-called premium-mass gamblers, who make big bets in cash and incur lower costs than VIPs brought in by middlemen earning commissions. Higher revenue at Melco Crown’s biggest casino, City of Dreams, helped make up for falling bets from high-stakes players at its VIP-focused casino Altira.

“The result was strong across the board,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas Securities (Asia) Ltd., wrote in a note today. Growth in the mass market, especially premium-mass visitors, was a key earnings driver, he wrote.

Melco Crown plans to pay a special dividend of 34.4 cents an American depositary share, or 11.5 cents a share, it said in a statement. The company said it intends to pay 30 percent of net income in quarterly dividends.

Higher Earnings

Adjusted property earnings before interest, taxes, depreciation and amortization, or adjusted property Ebitda, rose 46 percent to $394.4 million, Hong Kong-based Melco Crown said yesterday. That beat the $373 million average of six analyst estimates compiled by Bloomberg.

Fourth-quarter net income more than doubled to $223.2 million and net revenue gained 27 percent to $1.39 billion.

Casino revenue in Macau, the only place in China where casino gambling is legal, jumped 19 percent to $45 billion last year, about seven times that of the Las Vegas Strip.

VIP bettors account for about two-thirds of the casino revenue that flows into the Chinese city, the world’s largest gambling hub. They typically bet high stakes using credit and are brought in by junket operators, which earn commissions from casinos.

The Altira casino’s VIP rolling-chip revenue, or bets by high-stakes players, fell to $10.6 billion from $11.9 billion a year earlier.

City of Dreams drew visitors with shows such as “The House of Dancing Water,” featuring motorcycle stunts. Its VIP rolling-chip revenue rose 9 percent to $25.6 billion, mass-market table-game revenue increased 29 percent to $1.3 billion, while slot-machine handles gained 26 percent to $1.3 billion.

Melco Crown is spending more than $2 billion to build a new resort on Cotai, Macau’s answer to the Las Vegas Strip. The resort, called Studio City, is scheduled to open in mid-2015.

The project is on time and on budget, Chief Financial Officer Geoffrey Davis said on a conference call yesterday.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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