Melco Crown to Begin Paying Dividends as Earnings Rise
Melco Crown Entertainment Ltd. (MPEL), the Macau casino venture of billionaire James Packer and Lawrence Ho, said it will begin paying dividends after posting a gain in fourth-quarter earnings as it won more-profitable gamblers.
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 (200) said yesterday. That beat the $373 million average of six analyst estimates compiled by Bloomberg.
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 giving dividends. The company joins casino operators including Wynn Macau Ltd. (1128) and Sands China Ltd. in courting so-called premium-mass gamblers, high-stakes players who bet in cash and provide higher profitability than VIP customers brought in by middlemen.
“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.
Fourth-quarter net income more than doubled to $223.2 million and net revenue gained 27 percent to $1.39 billion.
Melco Crown gained as much as 2 percent to HK$111, headed for the highest closing price since Jan. 22. The stock rose 0.4 percent as of 1:04 p.m. in Hong Kong trading and has advanced 8.1 percent this year.
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.
At Altira, the Melco Crown resort that focuses more on VIPs, rolling-chip revenue, or bets, by high-stakes players fell to $10.6 billion from $11.9 billion a year earlier.
City of Dreams, Melco Crown’s largest casino, 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.
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