NEW YORK (TheStreet) -- Shares of Melco Crown Entertainment (MPEL) fell 4.66% to $23.96 in morning trading Wednesday after a senior Macau official announced the city wants to study restrictions on mainland Chinese tourists to alleviate overcrowding.
The government plans to approach China's central government in Beijing to determine Macau's capacity for visitors and to consider how "too many tourists impact residents' quality of life," according to Bloomberg.The site notes local broadcaster Teledifusao de Macau cited the Secretary for Social Affairs and Culture Alexis Tam Chon Weng as making the announcement on a radio talk show.
A decline in tourism would likely ultimately affect Macau's gaming revenue.
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Macau also announced a decline in gross gaming revenue to 575 million Macau pataca during the week of February 16 to 23, down from 583 million in the previous week. Macau casinos are usually quite active during the third, fourth, and fifth days after the Chinese New Year, which fell on February 19 this year, but that was not the case in 2015.
Analysts at UBS, Goldman Sachs, and Nomura Securities now expect February gross gaming revenue to decline approximately 55% year-over-year.
Separately, TheStreet Ratings team rates MELCO CROWN ENTMT LTD as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MELCO CROWN ENTMT LTD (MPEL) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.59, which clearly demonstrates the ability to cover short-term cash needs.
- MPEL, with its decline in revenue, underperformed when compared the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 19.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.68%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 57.50% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
- MELCO CROWN ENTMT LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MELCO CROWN ENTMT LTD reported lower earnings of $1.10 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 8.6% in earnings ($1.01 versus $1.10).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 58.4% when compared to the same quarter one year ago, falling from $223.25 million to $92.94 million.
- You can view the full analysis from the report here: MPEL Ratings Report