The Chairman and CEO of Melco Resorts & Entertainment, Lawrence Ho, says construction of Studio City Phase 2 will be completed before the end of the year, but any opening will only take place from the second quarter of 2023 and only then in stages.
Providing an update to investors during the company’s 3Q22 earnings call on Wednesday, Ho said Phase 2 construction was progressing on schedule. However, Melco will “monitor the market closely to determine the appropriate time to open and we are currently anticipating the opening to be in stages beginning in second quarter of 2023,” he said.
Ho also poured cold water on any immediate plans to pursue a full takeover of Studio City’s immediate parent, Studio City International Holdings Ltd, of which Melco holds a 54.9% stake. Melco earlier this year increased its interest in Studio City by 0.2% after committing to a US$300 million private share placement, although New Cotai LLC, which holds 23.4%, and Silver Point Capital LP, which holds 13.9%, also took part in the placement.
“We love Studio City and we think when the market reopens Studio City, given its location right next to the Hengqin light rail link, our thesis has always been that it will be the first stop to Macau in the future,” Ho said.
“The way we have always positioned Studio City as more mass-focused fits well with the potential change in demographics going forward, so at the right price we would love to own all of that asset.
“But there must be a willing seller and a willing buyer for the right price and honestly, given what has happened in the last three years, we will continue to be on defence in terms of cost containment and really waiting for the market to reopen before we do much. But going forward, from a medium to long term view, sure, absolutely [we would like to buyout Studio City].”
On the issue of Macau’s pandemic restrictions, Ho expressed considerable optimism over the return of eVisas and package tours from mainland China as of 1 November, describing it as the “best news we’ve heard in the past three years and potentially the biggest news for the next year.”
He did, however, add that it would take some time for the eased restrictions to have an impact. Melco is currently on a run of 11 straight quarters of net losses including a US$244 million loss in 3Q22.
“China is a huge country of 1.4 billion people, so when they do things at the national level, to have it trickle down to the provincial and city level takes time,” Ho said.
“With the official announcement [on eVisas] coming out on 31 October I think it will take a bit of time. Recently there have been some COVID outbreaks in China and there are some cases in Macau as well, so it is early days but it’s definitely encouraging going forward.”
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