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UPDATE 2-Melco Crown swings to H1 profit, bullish on Macau


Tue Aug 23, 2011 10:19am EDT

* H1 net profit $73.8 mln v $42.6 mln loss last year

* Ho says he is "very happy" with Q3 progress

* New casino project likely to start construction by Q1 2012

By Farah Master

HONG KONG, Aug 23 (Reuters) - Melco Crown Entertainment Ltd , the Macau casino venture owned by Australian billionaire James Packer and Hong Kong businessman Lawrence Ho, swung to a first-half net profit, bolstered by Chinese gamblers eager to try their luck in the world's largest gaming market.

The U.S.-listed company, one of the six licensed operators in Macau, said on Tuesday net profit for the first six months was $73.8 million, compared with a loss of $42.6 million, last year.

Melco, valued at around $6 billion, is one of the smallest operators in the former Portuguese colony, competing with bigger rivals SJM Holdings Ltd controlled by members of Stanley Ho and his family, Sands China Ltd and Wynn Macau Ltd .

Chief Executive Lawrence Ho, scion of Macau casino mogul Stanley Ho, said he was continuing to see strong gross gaming revenue growth in Macau.

"We are pretty happy so far for the third quarter," he told analysts on a conference call.

"We believe this growth is structurally supported by a strong and resilient Chinese economy and the continuing emergence of Chinese consumers."

Melco Crown applied to the Hong Kong stock exchange for a dual listing at the beginning of August. The tie-up would be between Hong Kong-listed Melco International Development Ltd and Australia's Crown Ltd .

Ho would not take any questions on the dual listing, citing compliance rules with the Hong Kong stock exchange.

Melco Crown's results follow a string of strong half-year results for Macau operators, who have seen net profit more than triple. MGM China Holdings Ltd posted a 380 percent increase in net earnings on Aug. 19, while Galaxy Entertainment Group Ltd , due to report earnings on Aug. 31, is expected to show solid gains after opening its new $2 billion resort.

Melco Crown operates three casino projects in Macau including the entertainment themed City of Dreams. In July it bought a majority stake in a large-scale gaming and entertainment resort, massively increasing its footprint on Macau's developing Cotai strip -- a dusty stretch of land dotted with scaffolding and multibillion-dollar properties including billionaire Sheldon Adelson's colossal Venetian.

Ho addressed concerns that the new project, known as Macau Studio City, would not have gaming tables, saying that he was confident in the government making the project a financial reality.

"In order to make it a reality of course you would need the necessary gaming tables to make the project financially viable," he said, adding that construction for the project was likely to start by the end of the first quarter next year once it had passed the relevant regulatory processes.

Shares in Macau casino stocks have plunged about 20 percent in the past few days on fears that wealthy Chinese gamblers will cut back on their gaming, leading to a sharp fall in revenue growth. A majority of analysts remain bullish on Macau casino stocks, saying the purchasing power of high-rolling VIP gamblers was unlikely to diminish sharply.

Kenneth Fong, J.P. Morgan's casino analyst in Hong Kong, said that while Macau would not be immune from a global slowdown, gaming revenue would still show growth, making the large drop in shares an opportunity to accumulate.

"We believe the correction is overdone because the fundamentals, valuation and outlook of the sector have not changed or have only become more attractive amid the selloff," he said.

Analysts remain bullish on Melco, with 11 rating it a "strong buy" or "buy", while four have a "hold" rating. There were no "sell" ratings. (Additional reporting by Mihir Dalal; Editing by Chris Lewis and Jon Loades-Carter)

ZACKS ranks STRONG BUY
http://www.zacks.com/stock/quote/MPEL


TECH ANALYSYS
After markets sell off : MPEL has now an UPSWING potential (backed by strong results)
Long term UPTREND

PS: todays lower asian markets could allow an lower start (buy opportunity...)