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Melco Crown Entertainment
Melco Crown Entertainment
 One of the 6 key players
in Macau
 Currently commands
11% market share
 Transformational
progress, in line with
booming gaming
industry
 Strong growth catalysts
in the pipeline
25%
18%
18%
11%
9%
7%
12%
Market Share
SJM Holdings
Las Vegas Sands
Galaxy Entertainment
Melco Crown
Wynn Resorts
MGM China
Others
Macau’s Gaming Industry
 Recorded US$45b in gaming revenue for 2013
 Outstrips Nevada’s gaming revenue of US$11.14b
for 2013
 Poised to further increase from spending of middle
class Chinese
 Industry poised for further growth in gaming
revenue
Melco’s Turning Point
 Opened Integrated Resort
(City of Dreams) in Cotai
(2009)
 City of Dreams became the
growth story that Melco was
looking for to ride the gaming
industry growth
 Superior vessel in attracting
the mass market gaming
segment
Why Melco Crown Entertainment?
 Superior growth metrics seen across profitability metrics
 Consistently growth in FCF despite heavy capex, endorsing quality earnings
 Consistently higher growth recorded over the past 5 years
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
-1000000
0
1000000
2000000
3000000
4000000
5000000
6000000
FY09 FY10 FY11 FY12 FY13
Growth In Profitability Metrics
Revenue Net Profit ROE (RHS) ROA (RHS)
Melco’s Bigger City Of Dreams
 Opening of Studio City
come 2015
 What Studio City is
about
 How it will translate to
further growth in
revenue
 Higher penetration of
mass market segment,
and eventual market
share
FY13 Total Revenue
City Of Dreams Mocha Clubs Altria Macau Studio City
Organizational Overview
 Sound management tenet
in place
 Seasoned and armed with
a wealth of gaming
experience
 Share based
compensation in line with
stewardship of Melco’s
growth direction
Lawrence Ho
Co-Chairman,
Executive
Director
John
Wang
(NED)
Clarence
Chung
(NED)
William
Nisbet
(NED)
Rowen
Craigie
(NED)
Douglas Packer,
Co-Chairman, non
executive director
Valuation
 Current Enterprise Value
-US$18.4b
 Adjusted Bk Value
-US$5.43b
 Asset Reproduction Value
-US$7.22b
 Excess of Enterprise Value
compared to reproduction and
book value (Half the stock is
made up of growth
expectations)
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Comparison of values ($000)
Asset Reproduction Value Vs
Adjusted Book Value
Adjusted Bk Value Asset Reproduction Value
Conclusion
 Key growth drivers are performing well
 Growth from profitability metrics are soaring, and should push higher come
2015 (Studio City)
 Valuation metrics from reproduction value and adjusted book value
suggests huge growth expected from market participants
 Current forward PE of 14.55x looks relatively cheap for growth potential
priced in
 City of Dreams Manila also in the pipeline to be up within the next 2 years
 Legalizing Casino bill in Japan could allow Melco to have a new foot in a
potentially huge gaming market
Melco Crown Entertainment

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Melco crown entertainment

  • 2. Melco Crown Entertainment  One of the 6 key players in Macau  Currently commands 11% market share  Transformational progress, in line with booming gaming industry  Strong growth catalysts in the pipeline 25% 18% 18% 11% 9% 7% 12% Market Share SJM Holdings Las Vegas Sands Galaxy Entertainment Melco Crown Wynn Resorts MGM China Others
  • 3. Macau’s Gaming Industry  Recorded US$45b in gaming revenue for 2013  Outstrips Nevada’s gaming revenue of US$11.14b for 2013  Poised to further increase from spending of middle class Chinese  Industry poised for further growth in gaming revenue
  • 4. Melco’s Turning Point  Opened Integrated Resort (City of Dreams) in Cotai (2009)  City of Dreams became the growth story that Melco was looking for to ride the gaming industry growth  Superior vessel in attracting the mass market gaming segment
  • 5. Why Melco Crown Entertainment?  Superior growth metrics seen across profitability metrics  Consistently growth in FCF despite heavy capex, endorsing quality earnings  Consistently higher growth recorded over the past 5 years -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% -1000000 0 1000000 2000000 3000000 4000000 5000000 6000000 FY09 FY10 FY11 FY12 FY13 Growth In Profitability Metrics Revenue Net Profit ROE (RHS) ROA (RHS)
  • 6. Melco’s Bigger City Of Dreams  Opening of Studio City come 2015  What Studio City is about  How it will translate to further growth in revenue  Higher penetration of mass market segment, and eventual market share FY13 Total Revenue City Of Dreams Mocha Clubs Altria Macau Studio City
  • 7. Organizational Overview  Sound management tenet in place  Seasoned and armed with a wealth of gaming experience  Share based compensation in line with stewardship of Melco’s growth direction Lawrence Ho Co-Chairman, Executive Director John Wang (NED) Clarence Chung (NED) William Nisbet (NED) Rowen Craigie (NED) Douglas Packer, Co-Chairman, non executive director
  • 8. Valuation  Current Enterprise Value -US$18.4b  Adjusted Bk Value -US$5.43b  Asset Reproduction Value -US$7.22b  Excess of Enterprise Value compared to reproduction and book value (Half the stock is made up of growth expectations) 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 Comparison of values ($000) Asset Reproduction Value Vs Adjusted Book Value Adjusted Bk Value Asset Reproduction Value
  • 9. Conclusion  Key growth drivers are performing well  Growth from profitability metrics are soaring, and should push higher come 2015 (Studio City)  Valuation metrics from reproduction value and adjusted book value suggests huge growth expected from market participants  Current forward PE of 14.55x looks relatively cheap for growth potential priced in  City of Dreams Manila also in the pipeline to be up within the next 2 years  Legalizing Casino bill in Japan could allow Melco to have a new foot in a potentially huge gaming market