Melco PH turns profitable

Tourist and casino players arrive at the grand opening of the City of Dreams mega-casino in Manila on February 2, 2015. Six gleaming golden towers surrounding a giant egg-shaped dome opened as the Philippines’ newest playground for the obscenely rich on Feb. 2, dwarfing the capital’s vast slums. AFP PHOTO/JAY DIRECTO

Gaming operator Melco Crown (Philippines) Resorts Corp. turned profitable in the first quarter on a sharp increase in casino and non-gaming revenues from integrated resort City of Dreams Manila in Pagcor Entertainment City.

Net profit for the first three months stood at P148.6 million, a turnaround from the net loss of P1.136 billion in the same period last year, the local unit of Macau casino giant Melco said in a regulatory filing.

MCP – which owns half of operations at City of Dreams Manila (CoD Manila) – reported improved operating revenues, lower employee benefit expenses, lower depreciation and amortization and net foreign exchange gains for the period, partially offset by associated increases in operating costs, payments to the Philippine parties as well as interest expenses.

Local stock brokerage COL raised its fair value estimate on MCP to P10.96 per share, citing this as “one of the main beneficiaries of the growing gaming industry.” It noted that the “outperformance” in the first quarter was due to “higher-than-expected gross gaming revenues.”

Casino revenues for the three months grew by 80 percent year-on-year to P7.3 billion, accounting for 93 percent of total net operating revenues. Total net operating revenues amounted to P7.88 billion, surging by 73.6 percent from the sale period last year.

Apart from higher volume of bets, CoD Manila enjoyed a higher “win” rate across all business segments.

A casino’s “win” or “hold” rate is based on the element of luck but is also affected by gaming limits, a player’s skill and resources and amount of time spent in the casino. While it’s often said that the house always wins, sometimes it wins more and sometimes less than the statistical probability.