Melco International Development posts stellar growth figures

Hong Kong based Melco International Development Limited has released first half of the year financial statistics showing an insane growth rate of 154% year-on-year to post a net profit of $140.12 million.

In a press release the Asian integrated casino resort owner and operator reported a net revenue of $2.5 billion and stated “The increase was mainly attributable to the better group-wide performance in all gaming segments and recovery of previously provided doubtful debt.”

Melco International Development is the single largest shareholder in Melco Resorts and Entertainment Limited, the Macau luxury integrated casino resort operator, which posted mid-year revenues down 1.6% year-on-year to hit $2.52 billion. However, after factoring in EBITDA, i.e.; earnings before interest, tax, depreciation and amortization, actual earnings hit $700.64 million an increase of 16.7%.

Melco Resorts and Entertainment Limited opened the doors on the Morpheus hotel and casino in June in the City of Dreams, Macau with 770 rooms, six duplex villas and three pools, at a cost of $1.1 billion. Melco Resorts also owns and operates a long list of Macau integrated casino resort properties, including the Studio City Macau, City of Dreams Manila, Altira Macau as well as the new City of Dreams Macau. The company’s portfolio also contains a chain of electronic gaming machine clubs.

Return of the whales

Melco Resorts attributed the dip in net revenues to needing to pay higher commissions to junket operators to attract Chinese whales. Trade receivables, as a net result of some success in this area, which include lines of credit extended to VIP players, have grown by a solid 10% to reach $221.66 million since December last year.

The growth in trade receivables is seen as a sign of the positive effects of Beijing easing up on its anti-corruption drive and allowing Chinese whales once again to visit and play in Macau on VIP junket tours.

The crackdown, launched in 2012, took a serious bite out of overall Macau gross gambling revenue as VIP junket players comprise nearly 50% of casino revenue in the former Portuguese enclave and now semi-autonomous Chinese city. The crackdown itself contributed directly to a 28-month long decline in Macau casino gambling revenues.

Beijing, however, has since eased restrictions, giving Macau room to breath as well as a 5.5% year-on-year increase in gross gambling revenue as the whales return.

Chairman and CEO of Melco International Development Limited, Lawrence Ho Yau Lung, stated in the company’s press release that the gambling monolith remained “bullish on our exposure to an expanding network of global operations and business development opportunities beyond Macau.”

Continued expansion abroad

The company used the release of its half-year earnings report to note that it has also broken ground on its latest venture, the City of Dreams Mediterranean integrated casino resort in Cyprus. The property is expected to open its doors in 2021 proclaiming to be Europe’s largest integrated casino resort complex.

Having learned from Las Vegas, and the vision initially posited by Steve Wynn of transforming the city into a family entertainment resort destination, Melco’s Cyprus development is expected to focus extensively on non-gaming revenue streams to attract even more visitors. Today nearly 50% of Las Vegas casino revenue comes from the city’s non-gaming related offerings.

As Ho stated in the company’s press release, the new developments will allow the company to continue to offer, “world-class premium offerings that go beyond gaming to satisfy tomorrow’s most sophisticated international travelers.”

The mega City of Dreams Mediterranean venue in Cyprus is also slated to be wed to a series of sister casinos in Larnaca, Paphos and Nicosia in the near future as well as connected to the company’s equally ambitions integrated casino resort project in the Turkish controlled Northern Cyprus side of the island.

When it comes to international expansion driving revenue growth, Melco’s real focus remains Japan. The country of 127 million has recently passed legislation allowing for the issuance of four integrated casino resorts to be build across the country, and Melco is one of a long line of suitors, including MGM Resorts International and the Las Vegas Sands Corporation, actively wooing Japanese government officials and well as the general public to pick up a piece of the pie.

Ho’s statement went on to read, “We view Japan as a market with the potential to rank among the largest global gaming destinations in Asia, second only to Macau. Our goal is to become a trusted partner in Japan’s integrated casino resorts industry and we have been dedicating the necessary resources and investments for the development of this potential market. We are confident that these projects will further enhance our exposure in the global market.”

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Thomas McCoy was born in Bethesda, Maryland and studied finance at the Kogod School of Business at American University in Washington D.C. before heading to New York and a job as a forex trader on Wall Street. Successful enough to launch his own, online forex trading platform, Thomas has long had a keen interest in the places where the worlds of finance and technology meet. As a prolific blogger, Thomas considers himself an expert on cryptocurrencies, casino asset restructuring, and emerging technologies set to change the way people do business.