MELCO CROWN ENTERTAINMENT

BACKGROUND
Melco Crown Entertainment is a
developer, owner and operator of
casino gaming and entertainment
resort facilities in Asia.
Melco Crown Entertainment was
founded on December 20, 2004 and is
headquartered in Hong Kong.
Mr. Lawrence Yau Lung Ho was
appointed as our executive director on
December 20, 2004 and has served
as co-chairman and chief executive
officer since December 2004

BUSINESS LINES
The company operates City of
Dreams, an integrated urban casino
resort located in Cotai, Macau;
Altira Macau, a casino hotel located
at Taipa, Macau; and
Mocha Clubs which comprise the
non-casino based operations of
electronic gaming machines in Macau
Melco Crowns also owns and operates
City of Dreams in Manila. Betting in
turning the Capital city in a new
metropolitan city.

Mocha Clubs

COMPARABLE COMPANIES
Direct Competitor Comparison

MPEL

LVS

MGM

WYNN

Industry

Market Cap:

11.72B

43.51B

10.77B

13.08B

2.07B

Employees:

18,367

48,500

52,100

16,800

5.42K

-0.2

-0.25

-0.06

-0.25

0.07

4.80B

13.59B

9.70B

5.43B

512.30M

0.78

0.81

0.38

0.72

0.59

1.04B

4.76B

2.12B

1.61B

160.91M

0.14

0.27

0.13

0.23

0.13

608.28M

2.58B

-149.87M

731.55M

N/A

EPS (ttm):

1.1

3.21

-0.31

7.18

0.12

P/E (ttm):

19.81

16.98

N/A

17.94

27.59

PEG (5 yr expected):

10.77

2.98

5.12

1.06

1.4

2.47

3.24

1.11

2.42

3.02

Qtrly Rev Growth (yoy):

Revenue (ttm):
Gross Margin (ttm):
EBITDA (ttm):
Operating Margin (ttm):
Net Income (ttm):

P/S (ttm):

WACC

COST OF EQUITY
AND WACC
CAPM : Rf + B ( Rm Rf )
3% + 1.69 ( 7.76% - 3%)
CAPM : 0.1104
WACC : E/V * Re + D/V * Rd (1-TC)
E (market cap) = 11.3 B
D = 6,146,422
V= 11,306,146,422
Rd = 3.6
0.57

% Re = 11.04%

WACC : 11.0348%

TC:

CAPM
Rf

3%

1.69

Rm

7.76%

E
D
V
Rd
Re
Tc

11,300,000
,000
6,146,422
11,306,146
,422
3.60%
11.04%
57%

Future
Dividends
1.90%

FREE CASH FLOWS

2014

2015

Net cash Operating

894,614
activities
1,028,806
(Capital Expenditures) -237,715 -285,258
Dividends
-342,718 -349,230
Free Cash Flow
314,181 394,318

Operating Activities
15%

Capital Expenditures
26%
20%
Dividends
1.90%

0.66
0.67
0.69
0.71
0.73
0.75

2015
2016
2017
2018
2019
2020

2016

2017

2018

2019

1,183,127
-342,310
-355,865
484,952

1,360,596
-410,772
-362,626
587,198

1,564,685
-492,926
-369,516
702,243

1,799,388
-591,511
-376,537
831,340

DCF

2014

314,181
FCF
282,957
DCF
3,921,846

Future Debt 2,414,984

2015

2016

2017

2018

2019

394,318
355,130

484,952
393,351

587,198
428,950

702,243
462,009

831,340
492,586

1,506,862

Shares
Outstanding

57831

Intrinsic
Value per
Share

26.06

Current Price

20.75

GOVERNANCE
Code of Business Conduct
and Ethics
SilentWhistle System
Nominating and Corportate
Governance Committee
Charter
Compensation Committee
Charter
Shareholders proposals for
election as a Director

Lawrence Ho.
Institutional investor Honored him as the
Best CEO in 2005.
5th China Enterprise Award for Creative
Businessmen by the China marketing
Association and and China Enterprise News.

MELCO CROWN
DEVELOPING
TOURISM FOR MACAO

UPGRADES & DOWNGRADES HISTORY

Date

Action

From

To

28-Apr-15

Morgan Stanley

Downgrade

Equal-Weight

Underweight

24-Apr-15

Nomura

Downgrade

Neutral

Reduce

19-Mar-15

Brean Capital

Initiated

Buy

10-Jun-14

Barclays

Initiated

Overweight

19-Sep-13

HSBC Securities

Initiated

Overweight

31-May-13

Oppenheimer

Initiated

23-Jan-13

Compass Point

Upgrade

24-Apr-12

HSBC Securities

Initiated

15-Apr-10

Credit Suisse

5-Apr-10

Street Insider 4.1 / 10

Credit Suisse

CREDIT RATING

Due to Macau Casino losses

of $100 Billion
Moodys warned that
declining in gambling will
weaken Melco Crown.

Research Firm

Outperform
Sell

Neutral
Overweight

Downgrade

Outperform

Neutral

JP Morgan

Upgrade

Neutral

Overweight

16-Mar-10

Credit Suisse

Upgrade

Neutral

Outperform

2-Feb-10

Credit Suisse

Upgrade

Underperform

Neutral

30-Oct-09

UBS

Downgrade

Buy

Neutral

18-Jun-09

Deutsche Securities

Upgrade

Hold

Buy

21-May-09

Deutsche Securities

Downgrade

Buy

Hold

20-May-09

Credit Suisse

Downgrade

Outperform

Neutral

19-Nov-08

UBS

28-Jul-08

Credit Suisse

17-Jan-08

Upgrade

Neutral

Buy

Downgrade

Outperform

Neutral

UBS

Upgrade

Neutral

Buy

18-Oct-07

Jefferies & Co

Initiated

Buy

24-Aug-07

Deutsche Securities

Initiated

Buy

20-Aug-07

Citigroup

Upgrade

3-Apr-07

Goldman Sachs

Initiated

28-Mar-07

Citigroup

Upgrade

30-Jan-07

JP Morgan

Initiated

Neutral

29-Jan-07

UBS

Initiated

Neutral

Hold

Buy
Neutral

Sell

Hold

M&A

SHAREHOLDER
PAYOUT STRATEGIES

SCHEMES

No Mergers.
Acquisitions : CLUB MOCHA

Future
Dividends
1.90%

0.66
0.67
0.69
0.71
0.73
0.75

2015
2016
2017
2018
2019
2020

No Schemes nor Scandals yet

The Downgrade of MACAU gambling
has affected the confidence investors
have in the company.
China government announced
discomfort with the opening of a new
City of Dreams in Manila (Philippines)

SWOT ANALYSIS
STRENGTH & OPPORTUNITIES

SWOT ANALYSIS
WEAKNESSES & THREATS

CONCLUSION
UPSIDE SCENARIO
As junkets continue to attract
additional high rollers to the MACAU
Casino, with MPELs City of dreams
has over 505 of its mass market
business from the premium segment,
assuming the company can improve
its sales growth to 15% by 2016. On
the same EBITDA margin assumption,
there is a 26% upside for MPEL.

THANK YOU

Capital Structure
Total Debt to Total Equity
98.09

Total Debt to Total Capital

49.52

Total Debt to Total Assets

40.3

Long-Term Debt to Equity

91.41

Long-Term Debt to Total Capital

46.15