Melco Soothes Credit Concerns
Editor's note: "Bricks and Mortar" is a series of columns written by real estate reporter Nicholas Yulico meant to help TheStreet.com readers generate real estate and gaming-related stock ideas.
Melco PBL (MPEL) shares jumped 13% Friday after being slammed earlier this week, when rumors of a problem with the Macau casino owner's credit facility weighed on the stock.
Melco's second-quarter results, released Friday, were weak, as expected, because of the delayed opening of VIP game rooms at the company's first casino, Crown Macau.
However, the company -- which I've picked as a buy for my Bricks and Mortar mock portfolio -- reported positive July and August trends for the Crown, and management did its best to soothe investors about the credit facility fears.Melco said average daily VIP rolling chip volume -- a key Macau operating statistic -- was $20 million in the second quarter. The volume more than doubled to $44 million in July and has improved another 25% to $55 million since the beginning of August. For the second quarter, Melco reported a loss of $69.2 million, or 6 cents a share, widened a loss of $5.2 million, or 1 cent a share, a year earlier. Heavy property-related expenses dragged down results. The period marked the first quarter that included any casino results, since the Crown property opened in May. Thus revenue for the quarter soared to $45.1 million from $5.5 million a year earlier. Melco said Crown's market share of total gaming revenue in Macau was 1.7% in May, 2.7% in June, and 4.9% in July. In August, the share rose to 7%, management said on the company's conference call.
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