Melco tops estimates, plans special dividend

Melco Crown Entertainment shares rose after the casino operator posted better-than-expected Q4 earnings on in line revenue and said it will pay a special dividend.

The net loss attributable to Melco Crown was $12.3 million, or $0.02 per ADS, compared with net income of $92.9 million, or $0.17 per ADS, in the fourth quarter of 2014.

Adjusted net income was $46.7 million, or $0.09 per ADS, compared with adjusted net income of $123.3 million, or $0.23 per ADS, in the fourth quarter of 2014. Analysts had been expecting a profit of $0.06 per ADS.

Net revenue fell 6% to $1.06 billion, in line with estimates for $1.07 billion.

The company said its new Studio City property in Macau, which started operations on October 27, generated revenue of $123.2 million. Studio City generated adjusted EBITDA of $12.6 million in the fourth quarter.

UBS analysts say the property will need to ramp up form here. “We believe this is a satisfactory start, but the property will need to ramp up more meaningfully from this level to meet our expectations.”

On the other hand, Melco’s City of Dreams Manila operation reported an increase in VIP volumes of around 8 percent in the quarter.

“In the Philippines, City of Dreams Manila continues to grow a more diversified revenue stream, with the continuing ramp of the rolling chip business complementing its mass market gaming and non-gaming segments. We remain confident in the long term success of the Philippines’ gaming market given the country’s anticipated economic growth and supportive demographics, together with an expanding and Government-supported inbound tourism market.” said Melco Crown chief Lawrence Ho during a conference call.

The company also said the board approved a special dividend of $0.2146 per share, or $0.6438 per ADS. The special dividend will be paid on or about Wednesday, March 16, 2016.

Bernstein says the unexpected dividend  dividend was a major announcement as it was “above and beyond its normal 30% dividend payout ratio. “The company is re-evaluating its dividend program to potentially increase the return of capital.”, Bernstein adds.