Melco International Thrives without Crown Resorts as Macau Bounces Back
Posted on: April 4, 2017, 02:00h.
Last updated on: April 4, 2017, 04:08h.
Lawrence Ho’s Melco International Development is riding high on a resurgent Macau. On Monday, the company reported a net profit of HKD10.37 billion ($1.33 billion) for full-year 2016.
Higher profits were aided by Melco’s takeover of Melco Crown, the company it formed jointly with Australia’s Crown Resorts.
Melco International reported net revenue of HKD23.9 billion ($3 billion), more than 50 times the HKD395.1 million ($50 million) it declared in 2015.
It looks like Crown’s James Packer may have gotten out of Macau just at the wrong time, Chastened by the arrest of 14 of its employees in China on suspicion of “gambling crimes,” and disheartened by almost two years of falling revenues for the gambling hub, Crown Resorts opted to reduce its investment exposure to Macau just as its economy bottomed out.
From May, Crown began reducing its stake in the joint venture, ultimately selling $1.2 billion of its stock in Melco Crown back to Ho, slashing its equity in the venture from 34 percent to 11.2 percent, and ceding the controlling stake to the Macau mogul.
Confident of Japanese License
But in June, for reasons unknown, the mass market, which Macau had been counting for since Beijing scared away its VIP high rollers with its anti-corruption crusade, began to arrive. Suddenly, the non-gaming amenities that Macau had been building began to fill up, and, driven by this new mass market, the economy began to grow again.
“After a long period of struggling through different challenges affecting the gaming industry in Macau, we have finally begun to see positive signs of recovery in gaming revenue during the third quarter of 2016,” said Ho in an official statement.
Melco has also been actively exploring opportunities in new markets, such as South Korea, Cyprus and Japan, according to Ho, who added that the company’s plan to secure a gaming license in Japan when that country opens up was making progress. He said he felt confident that the group would be able to participate a future Japanese casino market.
Melco Crown Name Change
Last week, Melco Crown shareholders voted to approve a planned name change and a “new corporate identity” to reflect life without Packer. Its English language name is set to beccome “Melco Resorts & Entertainment,” dropping “Crown” entirely.
The two companies formed Melco Crown in 2005 to explore the creation and operation of spectacular integrated casino resorts at a time when the Macau economy was booming.
Together they created the City of Dreams on the Cotai Strip, the City of Dreams Manila, in the Philippines, and, last year, Studio City Macau, a $4.5 billion resort that mingled television and film production facilities with retail, fine dining and gaming.
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