Disappointing results from two of Melco Crown Entertainment Ltd’s (Nasdaq: MPEL) Macau casinos led a JPMorgan analyst to withdraw the company’s price target and lower some of his estimates on Tuesday.
MPEL had a “very poor” June VIP table play hold of 0.8 percent at its newly opened City of Dreams complex, according to JPMorgan analyst Carlo Santarelli. The ‘hold’ is the amount declared by a casino as its cut (after expenses) of the total wagered.
The USD2.1 billion City of Dreams—which had its first phase opening on 1st June—currently offers three hotels, more than 500 gambling tables, Las Vegas-style shows, an upscale shopping mall and restaurants.
At CoD’s VIP-focused sister property Altira Macau (formerly Crown Macau) in the nearby Taipa district of Macau, the rolling chip hold percentage was two percent.
Santarelli said the results, combined with a likely slow ramp-up at City of Dreams, prompted him to reduce his second-quarter estimate to a loss of 13 cents per share from a loss of 4 cents per share. He revised his 2009 forecast to a loss of 29 cents per share from a loss of 17 cents per share and lowered his 2010 estimate to a loss of 20 cents per share from a loss of a penny per share.
Analysts surveyed by Thomson Reuters forecast a second-quarter loss of 12 cents per share for MPEL, an overall loss for 2009 of 22 cents per share and 2010 profit of 22 cents per share. Analysts’ estimates generally exclude one-time items.
Santarelli withdrew Melco’s USD5 price target but maintained its ‘neutral’ rating.
