Melco says Studio City, Manila boost Q1 sales, but results miss forecasts

Melco Crown Entertainment said Q1 revenue rose, boosted by income from its new Studio City project in Macau and its operations in Manila, but its net profit fell by just over a third.

Analysts also said that despite the contribution to Q1 revenue, the ramp up from Studio City has been slower than expected, while City of Dreams Manila will face mounting competitive pressures this year. Overall, the results were below expectations. 

Net income was $39.8 million, or US$0.07 per ADS, compared with net income of $60.6 million, or $0.11 per ADS, in the first quarter of 2015. That misses forecasts for $0.09, according to Capital IQ.

Adjusted net income was $40.5 million, or $0.025 a share, compared with $87.1 million, or $0.054 a year earlier. Adjusted property EBITDA was $248.8 million for the first quarter of 2016, as compared to $253.3 million in the prior year.  

Net revenue for the first quarter of 2016 was $1.1 billion, representing an increase of approximately 5 percent from 2015, but slightly shy of the $1.14 billion forecast by analysts.

The increase in net revenue was primarily attributable to Studio City, which started operations in October 2015 and City of Dreams Manila, which commenced rolling chip operations in February 2015, partially offset by lower rolling chip revenues and mass market table games revenues at City of Dreams and Altira Macau.

“The operating environment continues to stabilize in Macau, particularly in the mass market gaming segments which represents the primary driver of our company’s profitability in Macau,” CEO Lawrence Ho said. “We remain resolute in our belief that Macau remains the most important and exciting gaming destination in Asia. With ongoing improvements in infrastructure, including the Hong Kong – Zhuhai – Macau Bridge, the Taipa ferry terminal and the Macau light rail system, together with the rapid expansion of Hengqin Island, Macau is uniquely positioned to cater towards the burgeoning and increasingly consumer-focused, middle-to-upper-class in China and around the region.”

In the Philippines, City of Dreams Manila has delivered improved performance across all gaming and non-gaming metrics and delivered an approximately tenfold increase in adjusted property EBITDA compared to the first quarter of 2015.