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Melco PBL Entertainment (MPEL) |
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WIKI ANALYSIS
Melco-PBL Entertainment (NASDAQ: MPEL) develops, owns and operates casinos in Macau, China. It is the only pure-play Macau casino traded on U.S. exchanges, and one of only six companies authorized to run casinos on the island (others include MGM, Wynn and Las Vegas Sands). MPEL owns and operates the Crown Macau Hotel Casino. MPEL draws day-trippers and tourists of all economic background with its various gambling establishments due to its strategic proximity to China and other fast-growing Asian economies.
Business Overview
The great majority of MPEL’s revenue is generated from its casinos. Income from other sources, including rooms, food and entertainment remains insignificant.[1] It is also important to note that MPEL’s only source of income is from Macau.[2]
Business & Financial Metrics[3]
In 2009, MPEL incurred a net loss of $308.5 million on revenues of $1.33 billion. This represents a significant increase in net loss from 2008, when the company lost $2.5 million on $1.42 billion in revenue.
Key Trends & Forces
- Macau's Rapid Growth : Macau is the fastest growing gaming market in the world, overtaking Las Vegas in 2006[4] with gaming revenue compounding at 23% annually since 2001. The burgeoning Chinese economy, which is close in proximity, is sending large contingents of increasingly wealthy tourists to the gambling region. On the downside, MPEL, which is solely based in Macau, is extremely vulnerable to changes in the economic, political, and social conditions of Macau and China.
Macau is strategically located close to the burgeoning economies of Asia, namely, coastal China, Hong Kong, Taiwan, India, Japan and Korea.
- Chinese Tourism: The Chinese government has eased its regulations on travel permits to Macau in recent years. This phenomenon, along with a rapid increase of wealth and disposable income of Chinese citizens , will significantly fuel Macau’s gaming industry. This trend will also be affected by the ease of currency exchange between the Chinese Yuan and the Hong Kong dollar used in Macau.[5]
Competition
MPEL holds one of only 6 authorizations to operate casinos in Macau, a privilege that serves as a significant competitive barrier against other potential market participants. Nevertheless, MPEL’s operations compete with 25 other casinos in the city. In addition, the government of Macau may allow other companies to enter the market in the future, further intensifying competition. [6]
- Las Vegas Sands (LVS): This company owns and operates The Sands Macao. It is also developing The Venetian Macau.
- Wynn Resorts (WYNN): Since the opening of Wynn Macau in 2006, this company has actively pursued additional opportunities, and is currently building another large resort casino.
- MGM MIRAGE (MGM): This company opened the MGM Grand Macau in late 2007. However, like most of American companies operating in Macau, MGM operates primarily in Las Vegas, Nevada.
- Sociedade de Turismo e Diversoes de Macau: One of the most prominent companies in Macau, This company controls 18 casinos in the city, most prominent of which is the Grand Lisboa.
- Galaxy Casinos: Similar to MPEL, this company currently operates five casinos and is in the process of developing three more on the Cotai Strip.
References
- ↑ 2007 MPEL 6-k, Pg. 13
- ↑ 2006 MPEL 20-f, Pg. 25
- ↑ MPEL 2009 20-F pg. 3
- ↑ "Tiny Macau Overtakes Vegas Strip", BBC News
- ↑ 2006 MPEL 20-f, Pg. 26
- ↑ 2006 MPEL 20-f, Pg. 20
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