Melco Crown incurs P1.01 B loss in H1

MANILA, Philippines - The local unit of Macau-based casino giant Melco Crown Entertainment Ltd. continued to incur losses in the first half ahead of the opening of its $1.3-billion integrated resort complex in Manila.

In a regulatory filing, Melco Crown (Philippines) Resorts Corp. said its comprehensive net loss reached P1.01 billion in the first semester.

Melco Philippines, which was created just late last year, was weighed down by P601 million in non-operating expenses and P409 million in operating costs and expenses.

For instance, general and administrative expenses hit P103.5 million in the first half while pre-opening costs reached P193.8 million due to its lease agreement with Belle Corp., project management fee and staff costs.

“We are currently in the development stage, and as a result there is no revenue and cash provided by our intended operations,” Melco Philippines said.

“We have incurred losses to date and expect these losses to continue to increase until we commence commercial operations with the planned opening of the project, which is expected in mid-2014,” it added.

To date, construction on the main building is substantially complete while fit-out is ongoing.

Belle, the gaming arm and upscale leisure developer of mall and banking conglomerate SM Investments Corp. (SMIC), is building the $1.3-billion Belle Grande Manila Bay.

Melco Philippines, through subsidiary MCE Leisure (Philippines) Corp., will operate the integrated casino.

The integrated resort and casino will offer “a premium gaming experience and differentiated and innovative non-gaming facilities and entertainment experiences to its customers in a world-class facility,” Melco Philippines said.

Belle Grande will have approximately 967 rooms and suites, 242 gaming tables and around 1,450 gaming machines in addition to a range of entertainment and other non-gaming amenities.

In March, Melco Philippines raised $377 million after selling 1.09 billion shares to international investors.

In June, Melco Philippines’ board of directors approved the purchase of 40 million common shares of subsidiary MCE Holdings (Philippines) Corp. worth P9.5 billion.

Fresh capital will allow MCE Holdings to bankroll the construction of the Belle Grande project in Parañaque. The megacasino is banking on Chinese high rollers to prop up the country’s gaming revenues.

“Given the absence of fundamental factors at present, and with the first decent numbers not expected until the second half of next year, the stock should be considered a pure technical trade,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

Belle Grande will be the second of four casinos to open in Entertainment City, next to the $1.2-billion Solaire Resort and Casino of port magnate Enrique Razon that opened in March.

Philippine Amusement and Gaming Corp.’s (Pagcor) 120-hectare Entertainment City is the Philippines’ answer to Las Vegas, Singapore and Macau gaming hubs.

Belle Grande will be Melco Crown’s first casino outside Macau where it operates the City of Dreams and Altira Macau casinos.

The project is the first gaming venture of the Sy family, whose flagship company SMIC is involved in five core businesses: retail merchandising, mall operations, property, banking and hotel and leisure.