Melco Crown revenue rises; Taiwan widens probe of MCE money transfers

melco-crown-taiwanUnion Gaming analyst Grant Govertsen has dismissed reports of a plan by China to crack down on junket operators feeding VIPs into Macau casino VIP rooms. Govertsen noted that Beijing has previously issued statements supporting Macau’s growth, and incoming president Xi Jinping supposedly favors Macau’s ongoing development. If a crackdown is coming, Govertsen said the likely targets would be “disfavored junkets” rather than a sector-wide attack. Similar sentiments came from Lawrence Ho, co-chairman/CEO of casino operator Melco Crown Entertainment (MCE), who said he “hasn’t heard anything” about a crackdown and believes “this year is definitely going to be better than last year” for MCE.

Ho made the comments following the release of MCE’s Q4 results, which showed net income of $107.98m, up marginally from the $107.54m recorded in the same period a year ago, while net revenue rose 9% to $1.101b. MCE credited the revenue bump to “substantially improved” numbers from mass market table games and gaming machines. For the full year, MCE reported net revenue of $4.1b, up from $3.8b in 2011. Adjusted earnings rose from $809.4m in 2011 to $920.2m, while net income jumped to $417.2m from $294.7m the year before.

MCE is a joint venture between Australia’s Crown Ltd. and Hong Kong-based Melco International Development Ltd. that operates Macau’s City of Dreams and Altira Macau casinos as well as the Mocha Clubs slot parlors. MCE is also developing the Studio City casino-resort on Macau’s Cotai strip and the Belle Grande casino-hotel in the Philippines’ Entertainment City complex in Manila. Belle Grande is a joint venture of MCE and Henry Sy’s Belle Corp.

Looking at the individual properties, City of Dreams contributed the bulk ($772.5m) of MCE’s Q4 revenue. Adjusted earnings rose 18% to $219.5m, thanks to a significant boost in mass table games business. Rolling chip volume rose 15% to $23.5b, but win rate fell from 3% to 2.6%. Mass market table drop rose 24% to $1.009b, while the win rate rose from 25.7% to 30.9%. The average number of gaming tables in operation at City of Dreams in Q4 rose to 451 from 428 in Q4 2011, and the win per day rose from $21k to $22k. Slot handle rose 82% to $1.033b, and gaming machine win per unit per day hit $337, a significant bump over 2011’s $243.

At Altira Macau, revenue rose from $268m to $281.7m, while adjusted earnings fell 18% to $43.8m. Rolling chip volume fell to $11.9b from $12.1b, while win rate rose from 2.9% to 3.1%. Mass market table drop rose 9% to $158.1m, but win rate fell from 17.5% to 16.5%. The average number of gaming tables in operation in Q4 fell to 176 from 199 in Q4 2011, yet the win unit per day rose from $20.6k to $24.3k. Mocha Clubs revenue rose 2% to $35.3m, while earnings fell 21% to $8.1m. The average number of gaming machines in use rose from 1,800 to 2k, but net win per unit fell 9% to $183.

Meanwhile, more light has been shone on the investigation into whether a Taiwan-based MCE subsidiary illegally transferred $180m to Macau on behalf of high-rolling Taiwanese gamblers. While the MCE subsidiary has been identified as MCE International Ltd., Taiwanese authorities told GamblingCompliance that they executed a search warrant for the Taichung City offices of UK-listed online peer-to-peer currency exchange platform MoneySwap. A 2011 filing with the AIM exchange says MoneySwap had “operation agreements” with MCE International focusing on “Hong Kong and Taiwan and on the casino sector.”

MoneySwap had a similar arrangement with a Genting Malaysia subsidiary that expired in December 2011. It’s not clear whether MoneySwap ended its deal with MCE International at the same time, but a September 28, 2012 AIM filing lists no income attributable to casino or online gaming, compared with $450k in revenue from those sources a year earlier. Last week, MoneySwap group financial officer Chee Boon Lee “stepped down from the board of the company with immediate effect, in order to pursue other business interests,” but the company declined to say whether Lee’s departure was in any way connected with the investigation.