Melco Resorts draws mixed financial results in Q1 2018

Melco Resorts draws mixed financial results in Q1

Hong Kong-listed casino operator Melco Resorts & Entertainment Ltd. posted better-than-expected earnings in the first three months of 2018, but its revenue marginally missed most financial analysts’ estimates.

Melco Resorts draws mixed financial results in Q1In a regulatory filing, the Asian casino operator announced that its net revenue grew by 3 percent to US$1.31 billion in the three months to March 2018 from the recorded $1.27 billion during the comparable period in 2017.

The growth was fueled by higher group-wide gross gaming revenue (GGR) in all gaming segments, according to Melco. The casino operator’s revenue, however, slightly missed the $1.32 billion estimate of financial analysts.

Melco’s earnings are a different story, growing to $156.6 million or $0.32 per ADS (American Depository Share) from last year’s $113.4 million or $0.23 per ADS. The earnings beat analysts’ estimates of $0.28 per ADS. The dividend will be paid on May 23, according to Melco.

Operating income grew 40 percent in Q1, while adjusted property earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 13.7 percent to $401.8 million.

The EBITDA growth was mainly driven by increased gross gaming revenues in all segments, according to Melco.

“We continue to be optimistic on the outlook of the Macau market as the city’s gaming and entertainment markets continue to benefit from the improving demand environment, the anticipated completion of the Hong Kong-Zhuhai-Macau Bridge and the ongoing build-out of Cotai,” Melco Chairman and CEO Lawrence Ho said in a statement.

In Macau, net revenue of City of Dreams dropped 7.8 percent to $640.5 million in the first quarter of 2018, while adjusted EBITDA fell to $208.0 million from $213.5 million in Q1 2017.

The firm attributed City of Dreams’ dismal results to lower rolling chip volume, which fell to $11.1 billion from $12.6 billion in Q1 2017. Gaming machine handle fell to $1 billion from $1.025 billion.

City of Dreams’ saving grace was its mass market table drop, which rose 11.9 percent to US$1.18 billion. But mass market table hold fell 4.8 points to 32.1 percent.

Total non-gaming revenue at City of Dreams was $72.8 million, compared with US$77.8 million in Q1 2017.

The Studio City property’s net revenue rose 32.6 percent to $368.4 million, while adjusted EBITDA rose 62.4% to $110.1 million.

Studio City’s VIP and mass market segments performed well during the quarter, posting rolling chip volume of $6.6 billion and table games drop of $825.2 million.

Altira Macau reported revenue rising 10.4 percent to $120.4 million while its adjusted EBITDA grew more than three-fold to $18 million, due primarily to rolling chip volume rising $1.5 billion to $5.6 billion. Mass market table game drop grew 39.7 percent to $139.3 million.

Outside Macau, the City of Dreams Manila’s net revenue dropped to $142.2 million from $157.4 million a year ago, while ajusted EBITDA fell $2.3 million to $58.8 million.

What’s remarkable about City of Dreams Manila’s data was its rolling chip volume, which improved by $400m to $2.8 billion, while mass market table games drop climbed $34.3 million to $188.2 million.

City of Dreams Manila’s gaming machine handle rose to $820.9 million from $729.9 million. Total non-gaming revenue was up $2 million to $29.6 million.

Looking forward, Ho said that his company remains committed to its pursuit of a license in Japan. He believes that Melco is in a strong position to help Japan realize the vision for integrated resort development.

Japan continues to be a core focus for us. With the anticipated passage of the Integrated Resorts (IR) implementation bill later this year, the country will take a major step forward toward the development of the next generation of integrated resorts that will operate in this incredibly exciting, yet currently underpenetrated, tourism destination,” he said.