Melco Crown Stock Prediction: The Recovering Macau Casino Industry Is a Big Tailwind For Melco Crown

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.

 Melco Crown Stock Prediction


  • Melco Crown’s stock shot more than 15% over the last 30 days. I still see upside potential for this casino stock.
  • Continuing recovery in Macau’s month-to-month gambling revenue could help MPEL go even higher.
  • Macau’s September gross gaming revenue is predicted to beat August’s revenue. It looks like Mainland Chinese gamblers are again flocking to Macau.
  • After 26 months of revenue decline, August was the first time that Macau’s gambling-related revenue surged by 1.1%.
  • MPEL has very strong buy signals from the algorithmic forecasts of I Know First.

Melco Crown (MPEL) deserves a look from investors. This casino operator is one of the major beneficiaries from Macau’s recovering casino industry. Macau’s casino industry is 7x bigger than Las Vegas. A recovery in that city’s gambling industry is a strong incentive to again consider adding casino-related tickers like Melco Crown. The bearish August 9 MPEL article of Motley Fool author Travis Hoium should be ignored.

Beaten down casino tickers like MPEL recovered well since August. MPEL went up more than 8.5% since Hoium’s article was published. Melco Crown gets most of its revenue from Macau gamblers. A reversal of that city’s casino industry is a giant tailwind for Melco Crown. I believe Chinese authorities are done with their crackdown on their citizens flocking to Macau to gamble.

Chinese Rulers Can’t Afford To Prolong Its Crackdown On Macau Gambling

Once the high-rollers from China gets back to their pre-crackdown gambling frenzy, Melco Crown is again going to rake in better net revenue. The Communists rulers of China know all too well that Macau’s government coffers also suffer when the casino industry there suffers a prolonged restriction on Chinese citizens visiting casinos. The Macau casino money launderers were already arrested by Chinese officials. Macau’s casino industry could quickly recover its glory days again.

Chinese rulers know that Macau could lost out to Singapore and Manila as Asia’s premier gambling mecca if they continue their strict policy. Melco Crown built its City of Dreams casino in Manila as a swift response to Chinese government’s crackdown on Macau casinos. City of Dreams Manila posted Q4 2015 revenue of $80.9 million, with rolling chips of $1.3 billion. This is more than 10% higher than Q4 2014’s revenue of $7.6 million.

Junket operators of high-rolling gamblers (who got restricted in Macau since 2013) simply moved their operations to Manila or Singapore. I was in City of Dreams Manila in early August, 70% of the players there were mainland Chinese.

 Melco Crown Stock Prediction

(Source: Melco Crown Philippines)

I believe the restrictions on Chinese gamblers in Macau has loosened. After 26 months of monthly revenue decline, Macau’s casino-related gross revenue grew 1.1% Year-over-Year last month. September estimates also predict that Macau’s average daily Gross Gaming Revenue ((GGR)) is again streaking upwards. Macau’s GRR for the first 11 days of September was MOP 7.3 billion ($912 million).

This implicitly suggest an average daily rate of around MOP663 million ($82.99 million) – 3% Year-over-Year higher. September’s average daily rate is also higher than August’s MOP608 million ($76.1 million). Positive growth in Macau’s monthly GRR will definitely help MPEL recover from its one year negative return of -32.9%.

Macau’s Gaming Inspector official chart might put 2% Year-over-Year increase for September’s Gross gaming Revenue. Melco Crown’s stock surged more than 15.5% the past 30 days after Macau’s August GRR posted a 1% Year-over-Year. MPEL could possibly surge another 12% within the next 90 days.

 Melco Crown Stock Prediction



A loosened restriction on Chinese gamblers going to Macau casinos will help that city continually increase its monthly Gross Gaming Revenue. The bigger Gross Gaming Revenue from its Macau casinos, the better it is for Melco Crown. My 12-month price target for MPEL is $20. Melco Crown’s current 52-week high is $20.23. I expect retail and institutional investors to be more bullish on casino-related stocks after Macau Gaming Inspector reports another positive growth in September Gross Gaming Revenue.

My go long recommendation on MPEL is also supported by its strong buy signals from the algorithmic forecasts of I Know First. Please note that the predictability factors for the 3-month and one-year forecasts for MPEL are very high. It denotes that the deep learning neural network computers of I Know First are very confident in their Buy recommendation for Melco Crown.


 Melco Crown Stock Prediction