Seeking Alpha

The sell-off in Melco Crown continues

  • Melco Crown (MPEL -7.9%) is on its way to recording a fourth losing session as a combination of macroeconomic concerns in Asia and a re-assessment by JPMorgan on valuation of Macau gaming stocks continues to take hold.
  • 2014 Macau revenue growth projections are still in the double-digit range, but have been trimmed from their highest levels.
  • Shares of MPEL are now off about 16% from the all-time highs they etched out earlier this month.
Comments (9)
  • Macau earnings in 2013 were up over +18%. In the first 20 days of January Macau revenues were up 17% from last January. And we have not seen 2013 company earnings reports due in Feb or Chinese New Year yet. This sell off on the strength of a purely speculative JP Morgan theory about China "in a general way" is way out of line. And analysts are not taking into consideration that with much better transportation now coming on line, visitor volume will increase as will revenue per gaming position.
    24 Jan, 04:17 PM Reply Like
  • I agree, the dip is an opportunity.
    24 Jan, 04:19 PM Reply Like
  • This is a great time to buy some (MPEL).
    24 Jan, 04:40 PM Reply Like
  • If china reigns on its corruption, i think Macau revenues will be impacted. For detailed update on this.

    24 Jan, 04:55 PM Reply Like
  • I believe J P Morgan is wrong in their ststement on Macau show me the proof.
    24 Jan, 04:56 PM Reply Like
  • MPEL will be on the buy list when the carnage subsides......will be adding to LVS as well.
    Predicting blow out earnings across the board for Macau gamers
    24 Jan, 05:04 PM Reply Like
  • I actually think the selloff is well deserved and can be a harbinger to more to come in the sector.
    The gaming sector is highly leveraged to wealth effect feeling caused by sanguine and over complacent financial markets who have been rising on cruise control for the past 20-3 years.
    if we see a meaningful correction, coupled with fundamental issues in China re-surfacing, this sector can get halved very easily.
    At 23 times 2014 projected earnings MPEL is not a cheap stock at $38.
    Notice that the concensus shows just a a 16% rise in net EPS from 2014 to 2015.
    I'd rather wait for this one in the low to mid 20's.
    24 Jan, 05:09 PM Reply Like
  • Using JP Morgan's rationale on MPEL .... You would downgrade the U.S. market as well but JPM is far from that.... SP 500 Earnings in 2013 were up 8% while equities were up 30%.... I agree with COLT...
    25 Jan, 01:30 AM Reply Like
  • Indeed I would..and they would too..after the market goes down by another 5-10%..
    The US market is well over valued by at least 15-20% by many historical long term parameters..just a question of time before it reverts to its mean (and probably over shoots lower as is very common) - when that happens, MPEL as a very high beta stock, would be probably in the low 20's, or lower.
    25 Jan, 08:07 AM Reply Like
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