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China – Melco reports best ever EBIDTA in fourth quarter

By - 20 February 2019

Melco Resorts & Entertainment has reported its bets ever adjusted property EBITDA of $425m which has increased 25 per cent year-on-year, on revenue growth of five per cent.

Net revenue for the fourth quarter of 2018 was US$1,396.5m, representing an increase of approximately five per cent from US$1,332.6m for the comparable period in 2017. The increase in net revenue was primarily attributable to higher group-wide rolling chip and mass market table games gross gaming revenues.

Operating income was up 58 per cent to $204m during the quarter.

Melco’s biggest revenue growth came at City of Dreams, which generated $725m during the quarter compared to $613m a year ago. Revenue dropped though at the Altira Macau and Studio City properties.

Lawrence Ho, Melco’s Chairman and Chief Executive Officer, said: “During the fourth quarter of 2018, Melco delivered record property EBITDA of $425m, driven by robust mass gaming revenue growth at all of our Melco integrated resort. We remain bullish on Melco’s long-term prospects with Macau being one of the most attractive integrated resort markets and with Melco being well-positioned to benefit from Macau’s anticipated mass driven growth of our best-in-class premium mass-focused resorts. In January, the Macau government authorized Melco to operate 40 additional gaming tables at City of Dreams.”

“Morpheus’ positive reception has translated into business improvements with CODs mass table GGR growth accelerating to 23 per cent in the fourth quarter. Allowing for significant market share expansion in the high margin mass-market segment,” he added. “The opening of Morpheus only marks the beginning of the relaunch of City of Dreams. On top of that, we have recently unveiled the significantly upgraded VIP gaming spaces on the second floor of City of Dreams. Rolling refurbishment of Nüwa will also soon commence with the upgraded hotel rooms expected to come online over the next 18 months.”

“Going forward with further ramp of the iconic award winning Morpheus, we are confident in our ability to continue to drive revenue and market share improvement,” Mr Ho explained. “Our confidence is also supported by further property upgrades at City of Dreams. With our VIP guests now enjoying a significantly upgraded gaming experience with renovation of the VIP area on the second floor completed just ahead of the Chinese New Year. Lastly, we will soon commence the rolling refurbishment of Nuwa, with the renovated hotel rooms, expected to be rolled out in phases over the next eighteen months.”

Studio City continued to enjoy solid mass gaming revenue performance whilst in the Philippines, City of Dreams Manila delivered another solid quarter underpinned by robust mass gaming revenue growth.

Geoffrey Stuart Davis , Executive Vice President and Chief Financial Officer, added: “A favourable VIP win rate positively affected EBITDA at COD Macau, Studio City, Altira and COD Manila by approximately $28m, $11m, $10m and $7m respectively. In addition to the VIP win rate fluctuation, our performance was also affected by our bad debt provision. During the fourth quarter of 2018, we incurred a bad debt provision of $11m as compared to a bad debt reversal of $3m in the third quarter of 2018 and a reversal of $11m in the fourth quarter of 2017. On a year-over-year basis, the change in the bad debt provision negatively affected EBITDA by approximately $22m.”

Mr. Ho added: “Japan continues to be a core focus for us. We expect development of the next generation of integrated resorts to soon commence in this incredibly exciting, yet currently underpenetrated, tourism destination. With our focus on the Asian premium segment, high quality assets, dedication to world-class entertainment offerings, market-leading social safeguards and compliance culture, and our commitment to being an ideal partner to local governments and communities alike, we believe Melco is in a strong position to help Japan realise the vision for integrated resort development with a unique Japanese touch.”

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