Melco Crown Q3 revenue up 24% thanks to premium mass focus

melco-crown-macau-revenueAsian casino operator Melco Crown Entertainment (MCE) posted a 24% gain in Q3 revenue thanks to strong performance by the mass market gambling segment at its flagship City of Dreams casino in Macau. Revenue rose to $1.252b while adjusted earnings were up 39% to $315.2m and net income hit $179.4m, a significant boost on the $104.9m recorded in Q3 2012. MCE is a joint venture of Hong Kong’s Melco International Development and Australian casino operator Crown Resorts Ltd.

MCE CEO Lawrence Ho credited his company’s strong performance as a result of its “committed focus on the mass market segments, particularly at the higher end of the market where we have a significant competitive advantage … Our premium mass offerings continue to lead the way in Macau, with City of Dreams further extending its number one position in this increasingly important segment, as is evident in the property’s leading mass market table yields.”

City of Dreams’ Q3 revenue rose to $958.3m from $747.4m a year ago, pushing adjusted earnings up 46% to $298.4m. Mass table games revenue was up 73% thanks to a 36% increase in mass table drop and win rate increasing to 34.8% from 27.4% in Q3 2012. Over at the VIP tables, rolling chip volume rose 17% to $22.8b, but win rate fell to 3% from 3.2% last year, although that’s still at the high end of the expected range. Slots handle rose 52% to $1.242b while non-gaming revenue rose 12% to $70.9m. Looking ahead to Q4’s results, Ho said City of Dreams’ had experienced one of its best months on record in terms of rolling chip volume in October, during which Macau set a new monthly gaming revenue record.

Altira Macau’s net revenue rose to $242.4m from $215.7m, although earnings were flat. Mass table drop was up 18% to $181.9m, but win rate fell to 14.9% from 15.8%. VIP rolling chip volume dipped $200m to $10.8b but win rate rose to 2.9% from 2.6% last year. The Mocha Clubs chain of slot parlors generated $38.6m in revenue (+9%), while earnings rose 20% to $11.2m, thanks to net win per gaming machine per day rising 16% to $218. Three Mocha Clubs locations are set to close later this month to adhere to new Macau regulations aimed at reducing slot parlors’ presence near residential areas, but MCE says it still hopes to find new venues to host the slots and no workers are facing the axe for the time being.

MCE incurred $5.7m of operating expenses in the quarter via City of Dreams Manila, its in-construction Philippine casino project with Belle Corporation, set to open in mid-2014. On a post-earnings call with analysts, Ho celebrated the fact that revised guidelines issued by the Philippine Amusement and Gaming Corporation (PAGCOR) would allow City of Dreams Manila to operate as many as 365 gaming tables (up from 242, previously), as well as 1,680 gaming machines and a similar number of electronic table games (ETG).