Melco Crown Entertainment is the latest casino to report earnings that are another proof of slowdown in the Chinese VIP casino market.
The joint venture owned by Lawrence Ho and James Packer reported 7.4% net income fall to $104.9 million for the third quarter in 2012 to the Chinese gambling news . Net revenue was down 4.3% to $1.01 billion, and adjusted earnings decreased 5.8% to $226.4 million.
However, Melco Crown net revenue rose from $2.822b to $2.976b during the first nine months of 2012 over the same period last year. Net income has risen to $309.2m from $187.1m in the same period.
Melco Crown’s City of Dreams casino net revenue grew by about 9% year-on-year to $747.4 million. Adjusted earnings brew by20% to $204 million due to a 30% growth in mass market gross gambling revenue. Rolling chip volume was down 4% to $19.5 billion, but win rate rose 0.1 points to 3.2%, which is above the previously expected win range of 2.7%-3.0%.
Net revenue fell 35% to $215.7 million at Altira Macau, Melco Crown’s other Macau property, mainly because of drops in rolling chip volume (from $13.2 billion to $11 billion) and decrease in win rate from 3.2% to 2.6%. To better understand and evaluate these facts, it is important to notice that Melco Crown transferred gaming tables from Altira to City of Dreams to avoid cap.
Lawrence Ho blames the coming change in the Chinese governmentfor the shrinking VIP market. The casino tycoon informed that “VIP customers were kind of just waiting for it to happen before really coming out in full force.”
Hopes for the Chinese VIP gambling market
Ho added: “Macau continues to be a place where supply drives demand, I think if anything right now with better infrastructure, to bring people into Macau and more hotel rooms, it would be a much bigger market than it is.”
Melco Crown is set to commence the building of its third Macau property, Studio City, to be open in mid-2015.