Melco Crown Entertainment Ltd reports 82.6% Net Income decline and 7.6 pp EBITDA Margin decline from 21.9% to 14.3%
18/02/2016 • About Melco Crown Entertainment Ltd (
$6883) • By InTwits
Melco Crown Entertainment Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Melco Crown Entertainment Ltd doesn't have a profitable business model yet: 2015 ROIC is 1.0%
- Melco Crown Entertainment Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 8.9%.
- CAPEX is quite volatile: 277 in 2015, 337 in 2014, 123 in 2013, 228 in 2012, 94.2 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.0%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is -29.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Melco Crown Entertainment Ltd ($6883) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,831 | 4,078 | 5,087 | 4,802 | 3,975 | -17.2% |
| Gross Profit | 1,021 | 1,138 | 1,529 | 1,458 | 1,176 | -19.3% |
| SG&A | 220 | 227 | 256 | 312 | 384 | 23.2% |
| EBITDA | 798 | 889 | 1,223 | 1,054 | 569 | -46.0% |
| Net Income | 295 | 417 | 637 | 608 | 106 | -82.6% |
Balance Sheet
|
|---|
| Cash | 1,158 | 1,709 | 2,009 | 1,708 | 2,336 | 36.7% |
| Short Term Debt | 0 | 855 | 290 | 286 | 136 | -52.4% |
| Long Term Debt | 2,326 | 2,340 | 2,524 | 3,918 | 4,127 | 5.3% |
Cash flow
|
|---|
| Capex | 94 | 228 | 123 | 337 | 277 | -17.9% |
Ratios
|
|---|
| Revenue growth | 45.0% | 6.5% | 24.7% | -5.6% | -17.2% | |
| EBITDA growth | 96.5% | 11.4% | 37.7% | -13.9% | -46.0% | |
| Gross Margin | 26.7% | 27.9% | 30.0% | 30.4% | 29.6% | -0.8% |
| EBITDA Margin | 20.8% | 21.8% | 24.0% | 21.9% | 14.3% | -7.6% |
| Net Income Margin | 7.7% | 10.2% | 12.5% | 12.7% | 2.7% | -10.0% |
| SG&A, % of revenue | 5.7% | 5.6% | 5.0% | 6.5% | 9.7% | 3.2% |
| CAPEX, % of revenue | 2.5% | 5.6% | 2.4% | 7.0% | 7.0% | -0.1% |
| ROIC | 8.8% | 7.9% | 11.1% | 7.9% | 1.0% | -6.8% |
| ROE | 10.8% | 13.2% | 16.7% | 14.3% | 2.5% | -11.8% |
| Net Debt/EBITDA | 1.5x | 1.7x | 0.7x | 2.4x | 3.4x | 1.0x |
Revenue and profitability
Melco Crown Entertainment Ltd's Revenue dropped on 17.2% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 21.9% to 14.3% in 2015.
Gross Margin decreased slightly on 0.77 pp from 30.4% to 29.6% in 2015. SG&A as a % of Revenue increased on 3.2 pp from 6.5% to 9.7% in 2015.
Net Income marign dropped on 10.0 pp from 12.7% to 2.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Melco Crown Entertainment Ltd had CAPEX/Revenue of 7.0%. CAPEX/Revenue increased slightly on 1.4 pp from 5.6% in 2012 to 7.0% in 2015. It's average CAPEX/Revenue for the last three years was 5.5%.
Return on investment
The company operates at low ROIC (1.04%) and ROE (2.45%). ROIC decreased on 6.8 pp from 7.9% to 1.0% in 2015. ROE dropped on 11.8 pp from 14.3% to 2.5% in 2015.
Leverage (Debt)
Debt level is 3.4x Net Debt / EBITDA and 7.5x Debt / EBITDA. Net Debt / EBITDA jumped on 1.0x from 2.4x to 3.4x in 2015. Debt increased slightly on 1.4% in 2015 while cash surged on 36.7% in 2015.
Management team
The company's CEO is Ho Yau Lung "Lawrence". Ho Yau Lung "Lawrence" has 13 years tenure at the company. Melco Crown Entertainment Ltd's CFO Geoffrey Stuart Davis has spent 8 years at the company.
Appendix 1: Peers in Lodging
Below we provide Melco Crown Entertainment Ltd benchmarking against other companies in Lodging industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zhuhai Holdings Investment Group Ltd ($908) | 13.4% | 229.8% | 14.5% | 57.0% | |
| Carrianna Group Holdings Co Ltd ($126) | | 69.3% | -36.2% | 35.4% | -33.8% |
| NagaCorp Ltd ($3918) | | 24.6% | 23.7% | 17.2% | 24.6% |
| Emperor Entertainment Hotel Ltd ($296) | | 35.9% | 13.8% | 11.7% | -10.2% |
| Far East Consortium International Ltd/HK ($35) | | 6.4% | 111.9% | 9.0% | 25.7% |
| |
|---|
| Median (21 companies) | 28.9% | 18.2% | 10.2% | 0.8% | -3.5% |
|---|
| Melco Crown Entertainment Ltd ($6883) | | 6.5% | 24.7% | -5.6% | -17.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| SJM Holdings Ltd ($880) | 99.7% | 99.7% | 99.7% | 99.7% | |
| Wynn Macau Ltd ($1128) | 97.6% | 97.9% | 98.3% | 98.5% | |
| Emperor Entertainment Hotel Ltd ($296) | 70.9% | 77.1% | 75.6% | 76.8% | 70.9% |
| Asia Standard Hotel Group Ltd ($292) | 52.5% | 60.7% | 73.4% | 72.1% | 67.6% |
| Sino Hotels Holdings Ltd ($1221) | 69.7% | 71.3% | 70.4% | 68.9% | 65.8% |
| |
|---|
| Median (15 companies) | 52.5% | 55.7% | 55.9% | 51.3% | 65.4% |
|---|
| Melco Crown Entertainment Ltd ($6883) | 26.7% | 27.9% | 30.0% | 30.4% | 29.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Asia Standard Hotel Group Ltd ($292) | 69.1% | -23.9% | 65.2% | 49.9% | 40.4% |
| Emperor Entertainment Hotel Ltd ($296) | 38.7% | 44.9% | 46.4% | 46.9% | 43.1% |
| Sino Hotels Holdings Ltd ($1221) | 42.8% | 46.5% | 45.9% | 43.1% | 39.6% |
| Far East Consortium International Ltd/HK ($35) | 50.1% | 57.2% | 34.5% | 43.0% | 36.4% |
| NagaCorp Ltd ($3918) | 49.2% | 49.8% | 50.1% | 42.8% | 45.3% |
| |
|---|
| Median (21 companies) | 24.2% | 26.8% | 26.4% | 26.2% | 39.6% |
|---|
| Melco Crown Entertainment Ltd ($6883) | 20.8% | 21.8% | 24.0% | 21.9% | 14.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Macau Legend Development Ltd ($1680) | 1.3% | 5.0% | 24.2% | 73.0% | |
| Regal Hotels International Holdings Ltd ($78) | 4.9% | 7.4% | 7.2% | 60.4% | |
| Shangri-La Asia Ltd ($69) | 26.5% | 48.5% | 33.1% | 41.2% | |
| Wynn Macau Ltd ($1128) | 3.2% | 5.2% | 11.0% | 28.2% | |
| NagaCorp Ltd ($3918) | 20.3% | 25.9% | 17.2% | 24.0% | 27.8% |
| |
|---|
| Median (21 companies) | 6.5% | 7.4% | 11.0% | 13.2% | 12.3% |
|---|
| Melco Crown Entertainment Ltd ($6883) | 2.5% | 5.6% | 2.4% | 7.0% | 7.0% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| MGM China Holdings Ltd ($2282) | 47.3% | 46.2% | 53.8% | 54.5% | 24.0% |
| Wynn Macau Ltd ($1128) | 66.1% | 53.9% | 42.3% | 29.9% | |
| Galaxy Entertainment Group Ltd ($27) | 14.7% | 25.2% | 30.0% | 27.5% | |
| Sands China Ltd ($1928) | 14.5% | 14.2% | 24.4% | 26.7% | |
| SJM Holdings Ltd ($880) | 26.2% | 29.7% | 31.0% | 24.8% | |
| |
|---|
| Median (21 companies) | 5.2% | 7.6% | 5.7% | 3.9% | 7.7% |
|---|
| Melco Crown Entertainment Ltd ($6883) | 8.8% | 7.9% | 11.1% | 7.9% | 1.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Regal Hotels International Holdings Ltd ($78) | | 5.0x | 8.7x | 11.8x | |
| Century City International Holdings Ltd ($355) | -58.1x | 6.5x | 9.3x | 11.2x | |
| Shangri-La Asia Ltd ($69) | 4.0x | 6.0x | 6.8x | 6.9x | |
| Zhuhai Holdings Investment Group Ltd ($908) | -3.7x | -4.1x | 11.1x | 6.7x | |
| Asia Standard Hotel Group Ltd ($292) | 3.5x | | 3.7x | 5.2x | 5.5x |
| |
|---|
| Median (20 companies) | 0.1x | 0.2x | 0.4x | 0.4x | 1.5x |
|---|
| Melco Crown Entertainment Ltd ($6883) | 1.5x | 1.7x | 0.7x | 2.4x | 3.4x |
