Hong Kong
Initiating Coverage
15 April 2013
Melco Int’l Development
Buy (New)
Share price:
Target price:
The Game Changer
HKD13.42
HKD16.20 (new)
Initiate with BUY and TP of HKD16.20. We initiate coverage on Melco
International Development (MID) with a BUY recommendation and a
target price of HKD16.20, based on SOTP valuation. We like MID’s
portfolio of leisure and entertainment companies, which has given the
holding company handsome rewards. Melco Crown (6883 HK, Not
Rated), its 34%-owned key associate, is making strategic investments
in areas offering long-term growth, namely, the rising Philippine gaming
market (Belle Grande in 2014), Studio City (in 2015) and City of
Dreams (Phase 3 development in 2016). We believe this pipeline of
new growth initiatives between now and 2016 will continue to drive
performance and consequently stock price.
Jeremy TAN
jeremytan@kimeng.com.hk
(852) 2268 0635
Stock Information
Description: Melco International Development is an
investment holding company focused on providing
entertainment and property development services. The
company operates in the following segments: leisure and
entertainment as well as property and other investments.
Ticker:
Shares Issued (m):
Market Cap (USDm):
3-mth Avg Daily Turnover (USDm):
HSI:
Free Float (%):
200 HK
1,534
2,644
13.3
22,089
51.0
Major Shareholders:
Great Respect
Better Joy Overseas
Lasting Legend
(%)
19.49
18.81
7.53
Historical Chart
Possible stake increase in Studio City. Studio City looks set to be the
next casino to light up the Macau skyline when its construction is
completed in 2H15. Its unique TV/film production theme will give it an
edge in the race to attract the mass market audience. Melco Crown
may increase its stake by 7% to 67% should its partner New Cotai
Entertainment choose not to raise contributions. In our view, the market
appears to have underpriced the upside to this development.
Dreams realised in Cotai. City of Dreams (CoD) has been Melco
Crown’s main growth engine, benefiting from Cotai’s mass market
growth and the spillover effects from newly opened properties in its
vicinity. A shift in tables from Altira to CoD has led to improving yields.
The addition of another 800 hotel rooms in its Phase 3 development
programme in 2016 should also spur the organic growth in its flagship.
25.0
20.0
15.0
10.0
5.0
0.0
Apr 12
Foray into Philippine gaming industry. Melco Crown has a 98.5%
stake in Melco Crown Philippines Resorts (MCP, Not Rated) on the
Philippine Stock Exchange. The backdoor listing allows it to raise
capital through a primary equity offering of up to USD400m for up to
1.2b new shares. The price range set is expected to be between
PHP11 to 14 per share (potential to raise USD265m to 337m before
overallotment). In addition, the share accretion to Melco Crown from
operations at Belle Grande alone through the 50:50 JV is estimated to
be worth at least USD0.4/share (5% accretion) for Melco Crown. We
expect Belle Grande to open in 1H14 with 967 hotel rooms, 242 tables
and 1,451 slot machines.
Melco International Development – Summary Earnings Table
Jun 12
Aug 12
PRICE
Oct 12
Dec 12
Feb 13
Apr 13
PRICE REL. TO HANG SENG INDEX
Source: Bloomberg
Performance:
52-week High/Low
Absolute (%)
Relative (%)
1-mth
9.7
9.5
HKD13.96 / 5.12
3-mth
21.4
29.7
6-mth
95.3
89.8
1-yr
76.0
64.6
YTD
48.5
52.3
FYE Dec (HKDm)
Revenue
EBITDA
Recurring Net Profit
Recurring Basic EPS (HKD)
EPS Growth (%)
DPS (cents)
2011A
129.3
(68.7)
281.2
0.2
159.1
0.0
2012A
146.9
(86.9)
1,583.5
0.9
73.1
1.5
2013F
154.2
(85.9)
1,377.8
1.0
18.6
0.0
2014F
161.9
(98.1)
1,654.7
1.3
16.7
0.0
25.2
n/m
0.0
1.0
10.6
n/m
0.3
1.3
11.5
n/m
0.0
1.5
9.6
n/m
0.0
1.3
Net Gearing (%)
7.7
ROE (%)
3.9
ROA (%)
3.3
Consensus Net Profit (HKDm)
Source: Company, Maybank KE estimates
Net Cash
12.0
11.3
Net Cash
12.8
11.3
1,502.0
Net Cash
13.4
12.0
2,078.0
PER (x)
EV/EBITDA (x)
Div Yield (%)
P/BV (x)
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Melco International Development
Investment thesis
Diversified growth catalysts. We like MID’s diversified portfolio of leisure and
entertainment, not least because of its spectacular performance last year. For
2012, the company recorded a whopping 400% YoY surge in net profit to
HKD1.1b and declared a dividend per share of HKD1.5 cents. We believe MID
has taken strong stakes in strategic investments in its pursuit of long-term value.
On top of its existing operations at Mocha Clubs, Altira and CoD via Melco Crown,
it has identified Cotai as Macau’s next growth driver and is seeking to increase its
stake in Studio City and capitalise on the third stage of development of CoD.
Overseas expansion is also on the cards as it joins hands with SM Consortium to
foray into the rapidly growing Philippine gaming market.
Figure 1: Melco Int’l Development – key holdings
Source: Company, Maybank KE
Macau gaming
Mass market focus. Melco Crown benefits from being an early comer to Cotai
with an integrated property, City of Dreams (CoD), which has already captured a
wide mass market audience. It also runs Altira Macau, that mainly focus on the
junket VIP business. Recent weakness in the VIP segment has forced the
company to shift tables to CoD in order to maximise yield of the 625 tables. About
23 tables were shifted last year from Altira to CoD for this purpose. On the bright
side, we estimate that Melco Crown has roughly one-third VIP exposure against
two-thirds mass market exposure in terms of EBITDA. This enables it to ride the
boom in Macau’s mass market segment – growth of 30% in the first three months
alone outpaced VIP segment’s lacklustre growth of 10%.
Figure 2: Melco Crown – number of tables
Altira Macau
Figure 3: Melco Crown – average win per day per table (USD)
City of Dreams
City of Dreams
800
50,000
600
40,000
Altira Macau
30,000
400
20,000
200
10,000
0
0
2007
2008
2009
2010
2011
2012
Source: Macau Gaming Inspection and Coordination Bureau (DICJ),
Maybank KE
15 April 2013
2007
2008
2009
2010
2011
2012 2013F 2014F 2015F
Source: DICJ, Maybank KE
Page 2 of 20
Melco International Development
City of Dreams expansion. Melco Crown is embarking on Phase 3 of CoD’s
development, which will expand the gross floor area to 1.5m sq ft and add
another 800 hotel rooms. Although room revenues account for less than 3% of
total revenue, more rooms will attract more tourists to stay and eventually spend
at the gaming tables at its property. CoD is currently operating at 93% occupancy
level. With the completion of a new premium mass gaming area near the Grand
Hyatt lobby, it will also be shifting focus towards this segment where the minimum
bet size is typically in excess of HKD2,000. We think raising the size of a bet
could become a trend among the casinos in their bid to maximise table yields
amid limited table supply.
Slot parlour impact immaterial. Mocha Clubs is Macau’s largest non-casinobased electronic gaming machine parlour and is located in an area where visitor
footfall is dense. With 2,050 gaming machines, it draws in people who has time
for just a quick game, especially the lower spending “grind” segment. The Macau
government has taken steps to confine gaming within a 500m radius of a casino
or in an existing commercial building. The casinos have one year until Nov 2013
to adopt the policy, and Melco Crown is expected to close at least a third of the
clubs it owns. Only 600-700 of its slot machines will likely be affected and we do
not think this will have a material impact on its total revenue nor our earnings
model. After factoring in the potential impact of the regulation on slot parlours, we
estimate Mocha Clubs’ contribution to Melco Crown’s earnings will amount to an
immaterial USD0.1/share, based on 6x FY13F EBITDA.
Figure 4: Melco Crown – revenue mix (%)
Mocha Clubs
3%
Figure 5: Melco Crown – EBITDA mix (%)
Corporate
and Others
1%
Mocha Clubs
4%
Altira Macau
15%
Altira Macau
24%
City of
Dreams
72%
Source: Company, Maybank KE
City of
Dreams
81%
Source: Company, Maybank KE
Studio City expansion. Melco Crown plans to incorporate a television/film
production theme into its newest casino development, Studio City. Furthermore,
the resort’s strategic location adjacent to the Lotus Bridge checkpoint from Heng
Qin will make it an instant attraction and help improve overall branding. In earlier
reports, we have highlighted various large-scale tourism developments on Heng
Qin, which we believe will create external economies of scale that will enhance
the entire tourism landscape. The company plans to equip the property with 500
gaming tables, 1,500 electronic gaming machines and 1,600 hotel rooms. Melco
Crown took over a 60% majority share of the project from eSun Holdings. It could
raise its stake by 7% to 67% should its partner, New Cotai Entertainment LLC,
choose not to increase contributions. Construction has resumed in 2012 and the
new resort is expected to open in mid-2015. To date, the investment, which costs
USD2.9b including pre-opening expenses, has been fully funded. As operator of
the next casino to be completed in Macau, we believe Melco Crown’s position in
Cotai will become further entrenched, especially since there will not be any new
supply for the next two years.
15 April 2013
Page 3 of 20
Melco International Development
Figure 6: Melco Crown – hotel and table inventory in Macau
Casino
Rooms
City of Dreams
1400
Altira Macau
216
Mocha Clubs
Studio City
1600
Source: Company data, Maybank KE
Slots
1372
2050
1500
Tables
445
180
500
Remarks
To add 800 rooms by 2016
Estimated
Figure 7: Artist’s impression of Macao Studio City
Figure 8: Construction of Macao Studio City
Source: Macau Business
Source: Macau Business
Macau gaming market share
Steady despite competition. Melco Crown’s market share has held up relatively
well in the past year at 13.2% despite intensifying competition in Cotai with the
opening of two new casinos – Galaxy Macau in 2011 and Sands Cotai Central in
2012. Instead of losing market share, spillover effects from increased supply from
neighbouring hotels helped improved footfall and financial performance at CoD.
We forecast market share for Melco Crown to stay unchanged at 13% in both
2013 and 2014. Market share gains would become more distinct in 2015 when
Studio City opens and new hotel rooms under CoD’s Phase 3 expansion come
on-stream in 2016.
Figure 9: Melco Crown – monthly gross gaming revenue market share (%)
Altira
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
Jul 12
Aug 12
Sept…
Oct 12
Nov 12
Dec 12
Jan 13
Feb 13
City of Dreams
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Source: DICJ, Maybank KE
15 April 2013
Page 4 of 20
Melco International Development
Figure 10: Sector gross gaming revenue market share forecasts (%)
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
MGM
10.9%
Melco Crown
10.7%
9.6%
SJM
Wynn Macau
Galaxy
Sands China
10.4%
10.0%
9.6%
9.4%
9.6%
9.5%
9.0%
12.6%
13.2%
13.5%
13.0%
13.0%
14.4%
14.8%
15.1%
13.8%
13.4%
32.8%
31.2%
28.6%
27.2%
28.0%
27.4%
26.8%
27.6%
25.5%
24.5%
13.2%
12.2%
11.8%
12.1%
10.8%
11.0%
10.0%
13.2%
14.2%
14.7%
20.5%
18.8%
21.2%
19.4%
18.1%
21.0%
12.9%
19.8%
20.0%
11.0%
16.7%
15.6%
13.6%
14.9%
17.6%
17.3%
19.1%
20.4%
21.0%
22.5%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
13F
14F
Source: Company, Maybank KE
Foray into Philippine gaming
A burgeoning market. The Philippines’ gaming market is estimated to be
potentially USD6b by 2017, according to industry-wide consensus, under the blue
sky scenario. This would translate into growth at 40% CAGR over the next five
years, even outstripping growth in the other regions. The gaming market could
potentially rival in size with Singapore and Las Vegas. Overall, we are positive of
the business climate in Philippines whose GDP grew at 6.6% YoY in 2012, and
has its credit rating upgraded to investment grade by Fitch in March. We believe
continual wage growth and improving consumer confidence to flourish the
gaming industry, which has predominantly catered to the local community. The
gaming tax rate also seems more conducive than that in Macau, Malaysia and
Singapore. In the Philippines, gaming companies are not taxed at the bottom-line
level. They pay 17% tax for VIP and 27% for mass market revenues compared
with 39% tax against gross gaming revenue in other markets, thus translating into
a better bottom line.
Figure 11: Philippine gaming market (USDm)
7,000
6,000
5,000
4,000
CAGR: 40%
3,000
2,000
1,000
0
Source: PAGCOR, Company, Maybank KE
Build and they will come. New gaming supply is expected to come on-stream in
the next four years at the Entertainment City in Manila Bay, Parañaque. As has
happened in Macau and Singapore, this will spur gaming demand both
domestically and from tourists regionally. There are currently 13 casinos operated
by PAGCOR, Resorts World Manila which opened in 2009 and Solaire Manila in
March 2013. Melco Crown’s positioning in the Philippines likely will be similar to
15 April 2013
Page 5 of 20
Melco International Development
CoD’s, which focuses on the premium mass market, and we believe this should
help fill a missing niche in the local gaming market. We estimate that gross
gaming revenue (GGR) accounted for 0.52% of the Philippine gross domestic
product (GDP) in 2012, compared with 0.64% in Malaysia. But the GGR/GDP
ratio should catch up with Malaysia’s, as a rising working population and wage
growth will support the domestic market for gaming, not to mention tourism
growth. According to CEIC, tourist arrivals to the Philippines reached only 4.3m in
2012, translating to 9% YoY growth. While growth outpaced Macau, this is a far
cry from the more than 2m tourists Macau received on a monthly absolute basis.
Nevertheless, we believe the Philippines has the potential to be a prime tourist
destination, notwithstanding the negative perception of security in the country.
And when gaming supply and other infrastructure are progressively added,
tourism growth will be greatly enhanced.
Primary offering unlocks value. Melco Crown has a 98.5% stake in Manchester
International Holdings (MIH), renamed Melco Crown Philippines Resorts (MCP,
Not Rated), which will serve as the operational vehicle for its USD1b casino
investment in the Philippines. The PHP1.26b acquisition opened up an
opportunity for Melco Crown to raise up to USD400m cash from the market via
new share issuance through MCP. The price range for the primary placement has
been set at PHP11 to PHP14 per share (potential to raise USD265 to USD337
before overallotment). Against the implied enterprise value and our EBITDA
forecast, the market is estimated to price the deal at around 12x to 14x
EV/EBITDA. We believe the primary equity offering provides the catalyst to
unlock the value in MCP. Bell Grande is the joint-venture casino between Belle
(BEL, Not Rated) and Melco Crown. Belle, a company under the SM Consortium,
is the owner of the land and buildings, while Melco Crown will be the operator of
all the facilities within the resort complex. In total, Melco Crown’s contribution
towards its Philippine investment is estimated at least USD600. We believe
Melco Crown’s entry into the Philippine market will allow it to tap the growth
potential of other emerging gaming markets in the region. Its partnership with the
Philippines’ SM Consortium will also create synergistic value, with each party
benefiting from the competitive advantage offered by the other.
Figure 12: Philippine gaming inventory
Casino
Developer
Resorts World Manila
Travelers International
Solaire Manila
Bloomberry
Belle Grande
SM Consortium
Manila Bay Casino
Universal Entertainment
Resorts World Bayshore Travelers International
Source: Company data, Maybank KE
Rooms
1200
500
967
2050
1600
Tables
300
300
242
500
375
Slots Open date
1000
2H10
1200
1Q13
1451
1H14
3000
2015
1500
2016
Figure 13: Artist’s impression of Solaire
Figure 14: Artist’s impression of Belle Grande
Source: Solaire Resorts
Source: SM Investments
15 April 2013
Page 6 of 20
Melco International Development
Earnings forecasts
Consistent growth. We forecast Melco Crown, MID’s key asset, will record
EBITDA growth of 19.8% YoY for FY13F and 11.5% YoY for FY14F, translating
into EBITDA of USD1.1b and USD1.2b for the respective years. We note that our
FY13F/14F estimates are 9% higher than the consensus estimates. Consistent
organic growth at CoD and contributions from Belle Grande when it opens in
2H14 will underpin the increase. Margin improvement from a change in gaming
mix towards mass market will also become more evident in from 2013/14. As it
stands, 1Q13 mass market to VIP ratio to mass market ratio for Melco Crown is
73%:27%.
Figure 15: Melco Crown – EBITDA and revenue (USDm)
Revenue
6,000
EBITDA
EBITDA YoY Growth
5,000
25
19.8
20
15.3
4,000
15
3,000
11.5
10
2,000
5
1,000
0
0
2011
2012
2013F
2014F
Source: Company, Maybank KE
Blue sky Philippines. As mentioned earlier, it is estimated that the Philippine
gaming market will grow at 40% CAGR in the next five years to reach USD6b.
Under the blue sky scenario, we project Melco Crown will garner a 20% share of
the market’s total gross gaming revenue through its joint-venture casino, Belle
Grande. We further assign a 25% EBITDA margin to our projections to calculate
the incremental EBITDA contributions from Belle Grande, which is a margin
typical of a mass market styled casinos.
Figure 16: Melco Crown – share of Philippines’ gross gaming revenue (USDm)
Revenue
7,000
EBITDA
Phillipines GGR
6,000
6,000
5,000
4,500
4,000
3,000
3,000
2,000
2,000
1,600
1,109
1,000
100
150
2014F
2015F
225
300
2016F
2017F
0
2012
2013F
Source: Company, Maybank KE
15 April 2013
Page 7 of 20
Melco International Development
Financial assumptions
Central to our financial assumptions is the fact that Melco Crown’s gaming
concession will terminate on 26 Jun 2022 and its extension will be subject to
government approval. We also assume no contributions from Studio City until its
construction is completed in 1H15. On a quarterly basis, Melco Crown’s market
share of Macau GGR has held steady at 13.2% on average between 1Q11 and
4Q12. We have assumed that its market share will stay stable at 13% for both
2013 and 2014.
15 April 2013

VIP turnover growth and win rate. For 2013 and 2014, we assume VIP
turnover growth of 5.0% as per the 2013 industry VIP GGR growth forecast.
With respect to the VIP win rate, we assume the theoretical average of 2.85%
(2009-2011 blended average: 2.8%).

Mass market drop growth and win rate. For 2013 and 2014 we assume
mass market turnover growth of 30.0% at CoD and zero growth at Altira. With
respect to the mass market win rate, we assume the theoretical average of
26.5% at CoD and 16% at Altira (2009-2011 blended average: 19.6%).

Slot machine handle turnover growth and win rate. For 2013 and 2014,
we assume slot handle turnover growth of 5.0%. We also assume a slot
machine win rate of 5.0%

Junket commission rate. Going forward, we assume an average junket
commission rate of 1.25% of VIP turnover.

Tax rate. Melco Crown’s gaming tax is set at 39% of GGR (35% gaming tax,
1.6% contribution to a Macau public foundation and 2.4% contribution to the
Macau government) for the entire duration of its gaming concession. The
company is exempted from paying complimentary tax set at 12% of gaming
pretax profit until 2015. The exemption is subject to further extension by the
government.

Dividends. Melco Crown does not have a formal dividend policy nor does it
provide guidance on dividend payout ratio. In view of the multiple investments
in its pipeline until 2016, we do not think there will be any dividend payment
in the medium term.
Page 8 of 20
Melco International Development
Valuation
We use a sum-of-the-parts (SOTP) methodology to value MID, taking into
consideration its key companies as well as identifiable assets under its wing. We
value Entertainment Gaming Asia (EGT US), MelcoLot (8198 HK) and Mountain
China Resorts (MCG CN) at the fair market value against the shareholding
interest by MID. Together they account for 2.6% of MID’s total net asset value
(NAV). Melco Crown (6883 HK), the key asset, accounts for 95.5% of MID’s NAV
(see detailed valuation framework below). We have assigned a 30% discount to
MID’s NAV estimate, which is at +1 standard deviation of its two-year historical
range. We believe this is a better reflection of the company’s improved
fundamentals. It is also worthy to note that the stub value of MID after removing
its stake in Melco Crown is also at the two-year historical low. The stark negative
stub value as shown in the figure below is an indication that the market is
underpricing MID’s residual assets.
Figure 17: Melco International Development – sum-of-the-parts valuation
Ticker
Melco Crown
6883 HK
Entertainment Gaming
EGT US
MelcoLot Ltd
8198 HK
Mountain China Resorts MCG CN
Add:
Net cash/(debt)
Other Assets
Estimated NAV
Discount to NAV
Target Price
Interest
(%)
34%
38%
51%
19%
Value
(HKDm)
33,729
174
851
9
Value/share
(HKD)
21.99
0.11
0.55
0.01
241
429
35,434
0.16
0.28
23.10
30%
16.2
% NAV
(%)
Comment
95.49% TP: HKD70.2
0.56%
Fair Value
2.03%
Fair Value
0.03%
Fair Value
0.68%
1.21%
100%
FY12
FY12
2 year +1sd
Rounded
Source: Maybank KE estimates
Figure 18: Melco International Development – sensitivity analysis (valuation)
VAN
t nuocsi D
20%
25%
30%
35%
40%
Source: Maybank KE estimates
Figure 19: Melco Int’l Development – stub value (HKD)
60
16.0
15.0
14.0
13.0
12.0
0%
-1
-10%
-2
-20%
-3
-30%
-4
-40%
-5
-50%
May-12
Source: Bloomberg, Maybank KE
15 April 2013
Sep-12
Jan-13
80
21.0
19.7
18.4
17.1
15.7
Figure 20: Melco Int’l Development – discount to NAV
0
-6
Jan-12
Melco Crown (6883 HK) Target Price
65
70
75
17.2
18.5
19.7
16.1
17.3
18.5
15.1
16.2
17.3
14.0
15.0
16.0
12.9
13.9
14.8
-60%
Jan 12
May 12
Sep 12
Jan 13
Source: Bloomberg, Maybank KE
Page 9 of 20
Melco International Development
We value Melco Crown’s core business segments using the SOTP methodology
as well. We apply EV/EBITDA as the main metric, given that it is a common
valuation measure for industries characterised by continual and heavy capital
expenditure, similar to the gaming industry of Macau in its growth stage. We have
assigned an industry blended valuation of 12x FY13F EV/EBITDA for Melco
Crown. We believe this is justified as the company becomes more focused on the
mass market. We have assigned lower multiples for Altira Macau and Mocha
Clubs in view of the overall slowdown in VIP growth and the location of these
businesses on the Macau Peninsula. We value Altira Macau at 9x FY13F
EV/EBITDA for its exposure to the junket business and Mocha Clubs at 6x FY13F
EV/EBITDA for its slot machine parlour business. We believe that CoD, the
flagship company, warrants 12x FY13F EV/EBITDA as it is heavily exposed to
the Cotai mass market segment.
Studio City, should result in share accretion of USD1.5 as we assume a 20%
ROIC against its USD2.9b investment discounted by a WACC of 12%. While for
the Philippines investment, Belle Grande, we discount our earnings projection
base on our 20% market share assumption and 25% EBITDA margin, for a price
accretion of USD0.4/share. The 98.5% subsidiary Melco Crown Philippines
Resorts, MCP PM, is trading at PHP 16.5 / share with a market cap of USD 1.36b
on the Philippines stock exchange.
Figure 21: Melco Crown – sum-of-the-parts valuation
EBITDA
(USD m)
877.9
228.9
37.1
(41.1)
City of Dreams
Altira Macau
Mocha Clubs
Other expenses
Macao Studio City
Belle Grande
Total
1,102.7
Add:
Net cash / (Debt)
Minority Interest
Equity Value (USD)
Target Price (HKD)
Source: Maybank KE estimates
EV/EBITDA
(x)
13.0
9.0
6.0
13.0
EV
(USD m)
11,412.5
2,060.5
222.3
(534.9)
11.9
13,160.4
Value/sh
(USD)
6.9
1.2
0.1
(0.3)
1.5
0.4
9.9
(1,258.8)
(27.0)
11,874.6
169.2
(0.8)
(0.0)
9.1
70.2
Comment
FY13 EBITDA
ROIC: 20%
WACC: 12%
3 shares/ADR
HKD7.7/USD
Figure 22: Studio City – price accretion estimate
Studio City investment
Assumptions
EBITDA NPV
Price accretion
Source: Maybank KE estimates
USD2.9 b
ROIC 20%, WACC 12%, Growth 0%
USD1,348.4 m
USD4.6/share
Figure 23: Studio City – sensitivity analysis (value/share)
WACC
2
10.0%
8.0%
2.79
10.0%
2.54
12.0%
2.32
14.0%
2.13
16.0%
1.96
Source: Maybank KE estimates
15 April 2013
Return on invested capital (ROIC)
15.0%
20.0%
25.0%
4.18
5.57
6.96
3.81
5.08
6.35
3.48
4.64
5.80
3.19
4.26
5.32
2.94
3.92
4.90
30.0%
8.36
7.62
6.96
6.39
5.88
Page 10 of 20
Melco International Development
Appendix 1: Relative valuation
Figure 24: Consensus relative valuation comparison
Name
Macau
Galaxy Entertainment
Melco Crown
Melco International Development
MGM China
Sands China
SJM Holdings
Wynn Macau
Regional Average
United States
Caesars Entertainment Corp.
Las Vegas Sands Corp.
MGM Resorts International
Wynn Resorts Ltd.
Regional Average
ASEAN
Alliance Global Group Inc.
Belle Corp.
Bloomberry Resorts Corporation
Genting Bhd
Genting Malaysia Bhd
Genting Hong Kong Ltd.
Genting Singapore PLC
NagaCorp Ltd.
Regional Average
Pacific
Aristocrat Leisure Ltd.
Crown Ltd.
Echo Investment S.A.
SkyCity Entertainment Group
TABCorp Holdings Ltd.
Tatts Group Ltd.
Regional Average
MSCI Index
MSCI Asia ex Japan
MSCI China
MSCI Hong Kong
MSCI Consumer Discretionary
MSCI Asia ex Japan
MSCI China
MSCI Hong Kong
Source: Bloomberg, FactSet
Updated: 14 Apr 2013
15 April 2013
Ticker
27 HK
6883 HK
200 HK
2282 HK
1928 HK
880 HK
1128 HK
CZR US
LVS US
MGM US
WYNN US
PER (x)
FY13
FY 14
15.5
13.0
23.9
19.3
14.1
10.2
13.0
11.7
20.9
17.0
14.4
13.1
15.7
14.4
16.8
14.1
EV/EBITDA (x)
FY13
FY14
11.3
9.3
13.0
11.7
10.2
16.4
10.2
13.1
12.4
9.4
13.7
9.2
12.2
10.9
ROE (%)
FY13
31.8
13.3
13.1
72.2
32.7
34.5
101.0
42.7
10.1
11.3
9.6
10.2
10.3
64.9
20.6
(2.6)
318.5
100.3
FY14
27.9
15.8
17.2
62.6
35.6
34.0
84.7
39.7
EBITDA growth (%)
FY13
FY14
16.6
15.6
17.0
10.1
11.9
42.2
9.1
10.6
22.3
10.8
18.1
9.8
9.3
8.0
30.1
23.4
(0.4)
(54.7)
(0.4)
(3.0)
29.3
102.9
14.8
36.0
7.5
8.6
5.6
3.4
6.3
20.5
17.9
21.1
20.8
19.1
18.5
10.8
12.6
10.3
10.4
11.0
AGI PM
BEL PM
BLOOM PM
GENT MK
GENM MK
GENHK SP
GENS SP
3918 HK
17.2
90.6
38.8
15.7
12.8
15.7
23.2
11.9
28.2
14.6
29.3
17.8
14.2
12.1
11.6
20.0
10.1
16.2
12.3
52.7
24.7
6.6
6.7
22.7
11.8
9.1
18.3
10.5
16.2
13.8
5.8
5.9
19.2
10.3
7.4
11.1
14.6
5.1
18.9
10.5
12.4
15.4
9.4
27.7
14.2
14.8
10.7
33.1
10.4
11.8
19.3
9.7
27.7
17.2
11.4
238.4
905.9
12.6
10.0
31.9
13.8
20.3
155.5
14.3
208.6
71.2
6.5
4.7
11.5
8.9
19.9
43.2
ALL AU
CWN AU
EGP AU
SKC NZ
TAH AU
TTS AU
19.3
20.4
24.1
17.9
17.7
20.4
20.0
16.8
17.1
19.0
16.0
17.0
19.3
17.5
11.3
14.6
9.3
9.7
7.7
11.6
10.7
9.9
13.0
8.2
9.1
7.2
10.8
9.7
33.8
12.6
4.4
16.8
9.4
8.1
14.2
32.9
14.1
5.4
17.6
9.6
8.3
14.7
(2.6)
55.3
5.2
(34.5)
(21.5)
0.4
11.7
12.8
12.9
8.1
4.1
5.6
9.2
MXASJ
MXCN
MXHK
11.4
9.3
15.5
10.2
8.4
14.0
7.6
5.9
15.1
6.9
5.3
13.5
7.6
5.9
15.1
6.9
5.3
13.5
16.5
17.1
12.4
11.4
9.3
15.5
Index
MXASJCD
MXCN0CD
MXHK0CD
10.4
12.5
16.9
9.1
10.6
14.2
7.3
5.5
12.2
6.6
4.8
10.7
7.3
5.5
12.2
6.6
4.8
10.7
10.0
20.9
20.2
10.4
12.5
16.9
Page 11 of 20
Melco International Development
Appendix 2: Company background
Founded in 1910 and listed on the Hong Kong Stock Exchange (HKEx) in 1927,
Melco International Development is a holding company involved in the leisure
and entertainment industry. Its portfolio includes companies such as Melco
Crown Entertainment (6883 HK, MPEL US), Entertainment Gaming (EGT US)
MelcoLot (8198 HK) and Mountain China Resorts (MCG CN) as well as a
collection of private investments.
Melco Crown operates casino gaming and entertainment resort facilities that
target the rapidly expanding gaming market in Macau. On 19 Dec 2006, it listed
on the NASDAQ and successfully raised over USD1.14b in the process. The
company is also dual-listed on the main board of the HKEx.
MelcoLot manages one of the largest lottery retail sales networks in China.
Venue management aside, it is also involved in the distribution of scratch cards
and lottery vending terminals in various provinces in China. With technical
support from its strategic partner Firich, a worldwide leading point-of-sales
system manufacturer listed in Taiwan, MelcoLot has a manufacturing base in
Shanghai that produces highly versatile, cost-effective and reliable lottery
vending terminals for the region. Its South Korean arm is a member of a
consortium that operates the national welfare lottery under an exclusive licence
from the South Korean government. The consortium comprises well-respected
local corporations and INTRALOT, a leading supplier of integrated gaming and
transaction processing systems
Entertainment Gaming Asia Inc. (EGT), a provider of gaming technology
solutions, is listed on the NYSE American Stock Exchange. The company
secures long-term contracts to provide comprehensive solutions for slot machine
operations. It retains ownership of the gaming machines and systems and
provides on-site maintenance. In return, it receives recurring daily fees based on
an agreed upon percentage of the net gaming win per machine. EGT has
established a strategic presence in the Asia Pacific with a focus on the
Philippines and Cambodia. In May last year, it opened Dreamworld Casino in the
Pailin Province of Cambodia. The casino’s strategic location at the CambodianThai border on a growing trade route connecting the two countries will attract
mass market and VIP premium players visiting from the surrounding areas.
Figure 25: Business Overview
Source: Company, Maybank KE
15 April 2013
Page 12 of 20
Melco International Development
Figure 26: Melco Crown – SWOT analysis
Strengths
 First mover on Studio City expansion
 Strong mass market presence on Cotai
Weaknesses
 Multiple concurrent investments
 High premium USD900m for Macau licence
Opportunities
 Philippine JV, Studio City
 Possible new gaming market opening
Threats
 Policy restrictions
 GGR slowdown
Source: Maybank KE
Figure 27: Selected board members and management
Mr. Lawrence Yau Lung Ho
Mr. Ho was appointed the Group Managing Director of the company in Nov 2001 after he completed a
general offer for the purchase of the shares of the company. He was appointed as Chairman and
Chief Executive Officer on 15 Mar 2006. He is also the chairman of the executive, finance and
regulatory compliance committees and a member of the corporate social responsibility committee of
the company. Mr. Ho is currently the Co-Chairman and Chief Executive Officer of Melco Crown
Entertainment Limited.
Mr. Tsui Che Yin, Frank
Mr. Tsui has been an Executive Director of the company since Nov 2001. He is also a member of the
executive, finance, regulatory compliance and corporate social responsibility committees of the
company. Mr. Tsui has more than 30 years of experience in investment and banking, having held
senior management positions at various international financial institutions. He is currently a director of
Mountain China Resorts (Holding) Limited, a company listed on the TSX Venture Exchange of
Canada, an independent non-executive director of Hong Kong-listed Jinhui Holdings Company
Limited and a non-executive director of Oslo-listed Jinhui Shipping and Transportation Limited. Prior
to joining the group, Mr. Tsui was the President of China Assets Investment Management Limited, the
investment manager of China Assets (Holdings) Limited, which is listed in Hong Kong.
Mr. Chung Yuk Man, Clarence
Mr. Chung has been an Executive Director of the company since May 2006. He is a member of the
executive, finance and corporate social responsibility committees of the company. He is currently a
non-executive director of Melco Crown Entertainment Limited. Mr. Chung has more than 20 years of
experience in the financial industry in various capacities as chief financial officer, investment banker
and merger and acquisition specialist. He was named one of the “Asian Gaming 50 – 2009 and 2010”
by Inside Asian Gaming magazine.
Source: Company
Figure 28: City of Dreams
Figure 29: Altira Macau
Source: Company
Source: Company
15 April 2013
Page 13 of 20
Melco International Development
Appendix 3: Macau macro statistics
40%
35%
30%
25%
20%
15%
10%
5%
0%
Mar 13
Feb 13
Jan 13
Dec 12
Oct 12
Nov 12
Sept 12
Jul 12
Aug 12
2010
2009
2008
2007
2006
2005
Source: DICJ, Maybank KE
Mass rev (MOPm)
YoY chg
Jun 12
9.7
0
Apr 12
100,000
May 12
31.0
23.0
Mar 12
200,000
VIP rev (MOPm)
Slot rev (MOPm)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Jan 12
46.6
300,000
(%)
70
60
57.8
50
42.7
40
30
13.5 11.0 12.5 20
10
0
2014F
400,000
GGR YoY (RHS)
2013F
Slots
2012
Mass
2011
VIP
(MOPm)
500,000
Figure 31: Macau – monthly gross gaming revenue (MOPm)
Feb 12
Figure 30: Macau – annual gross gaming revenue (MOPm)
Source: DICJ, Maybank KE
Figure 32: China – M1 and M2 growth vs gross gaming revenue growth (%)
40
China M1 growth YoY
GGR growth YoY 3 mths backward (RHS)
China M2 growth YoY
100
80
30
60
20
40
20
10
0
Jan-06
0
-20
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Source: DICJ, Bloomberg, Maybank KE
3,000,000
40
2,500,000
30
80%
20
60%
1,000,000
0
40%
-10
20%
-20
0
-30
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
500,000
Source: DSEC, Maybank KE
15 April 2013
Peninsular
0%
Jan 13
10
1,500,000
Jan 11
2,000,000
Cotai / Taipa
100%
Jul 12
Visitor Growth YoY (RHS)
Jan 12
Visitors
Figure 34: Macau – gross gaming revenue mix
Jul 11
Figure 33: Macau – visitor arrivals
Source: DSEC, Maybank KE
Page 14 of 20
Melco International Development
Appendix 4: Entertainment City Map
Figure 35: Entertainment City Map
Source: Google Map, Maybank KE
15 April 2013
Page 15 of 20
Melco International Development
INCOME STATEMENT
FYE Dec (HKDm)
2011A
2012A
2013F
2014F
Revenue
EBITDA
Depreciation &Amortisation
Operating Profit (EBIT)
Interest (Exp)/Inc
Associates
One-offs
Pre-Tax Profit
Tax
Minority Interest
Net Profit
Recurring Net Profit
129
(69)
(6)
(63)
(123)
459
4
267
15
(1)
280
281
147
(87)
(6)
(93)
(99)
1,308
0
1,116
7
(2)
1,122
1,583
154
(86)
(7)
(93)
(123)
1,572
0
1,363
16
(1)
1,378
1,378
162
(98)
(7)
(105)
(123)
1,860
0
1,639
17
(1)
1,655
1,655
Revenue Growth %
EBITDA Growth (%)
EBIT Growth (%)
Net Profit Growth (%)
Recurring Net Profit Growth (%)
Tax Rate %
3
27
39
234
(285)
N/A
14
26
47
301
463
N/A
5
(1)
0
23
(13)
N/A
5
14
13
20
20
N/A
FYE Dec (HKDm)
2011A
2012F
2013F
2014F
Profit before taxation
Depreciation
Net interest receipts/(payments)
Working capital change
Cash tax paid
Others (incl'd exceptional items)
Cash flow from operations
Capex
Disposal/(purchase)
Others
Cash flow from investing
Debt raised/(repaid)
Equity raised/(repaid)
Dividends (paid)
Interest payments
Others
Cash flow from financing
Change in cash
(1,450)
15
0
(127)
0
1,421
(141)
(7)
0
407
400
(96)
1
(0)
(250)
0
(345)
(86)
(209)
10
0
17
0
155
(27)
(1)
0
(34)
(34)
53
1
0
(0)
0
53
(8)
280
6
0
(0)
0
(316)
(31)
(1)
0
18
17
8
(24)
(19)
0
0
(35)
(48)
1,122
(6)
99
(6)
0
(1,128)
81
(1)
0
(72)
(73)
(28)
0
(20)
99
0
51
59
CASH FLOW
BALANCE SHEET
FYE Dec (HKDm)
2011A
2012A
2013F
2014F
Fixed Assets
Other LT Assets
Cash/ST Investments
Other Current Assets
Total Assets
187
7,635
680
76
8,578
254
8,845
730
96
9,925
102
10,417
1,548
77
12,144
103
12,277
1,342
78
13,799
ST Debt
Other Current Liabilities
LT Debt
Other LT Liabilities
Minority Interest
Shareholders' Equity
Total Liabilities-Capital
228
94
1,005
40
29
7,183
8,578
34
127
455
11
-77
9,374
9,925
34
94
1,215
40
29
10,732
12,144
34
94
1,215
40
29
12,387
13,799
Share Capital (m)
Gross Debt/(Cash)
Net Debt/(Cash)
Working Capital
7,090
1,233
552
434
11,882
489
(240)
664
15,826
1,249
(299)
1,498
15,826
1,249
(92)
1,292
FYE Dec
2011A
2012A
2013F
2014F
EBITDA Margin %
Op. Profit Margin %
Net Profit Margin %
ROE %
ROA %
Net Margin Ex. El %
Dividend Cover (x)
Interest Cover (x)
Asset Turnover (x)
Asset/Debt (x)
Debtors Turn (days)
Creditors Turn (days)
Inventory Turn (days)
Net Gearing %
Debt/ EBITDA (x)
Debt/ Market Cap (x)
(53.1)
(48.7)
216.6
3.9
3.3
216.6
N/A
2.3
1.5
7.0
9.9
11.0
9.3
7.7
(18.0)
17.4
(59.1)
(63.0)
764.0
12.0
11.3
857.1
N/A
11.3
1.5
20.3
163.6
121.0
6.4
Net Cash
(5.6)
4.1
(55.7)
(60.1)
893.5
12.8
11.3
893.5
N/A
11.2
1.3
9.7
9.9
8.9
9.3
Net Cash
(14.5)
7.9
(60.6)
(64.8)
1,022.0
13.4
12.0
1,022.0
N/A
13.5
1.2
11.0
9.9
8.2
9.3
Net Cash
(12.7)
7.9
PER SHARE DATA
FYE Dec (HKD)
2011A
2012A
2013F
2014F
0.2
n/m
5.9
0.1
n/m
0.0
0.9
n/m
7.1
0.1
n/m
0.0
1.0
n/m
8.2
0.1
n/m
0.0
1.3
n/m
9.4
0.1
n/m
0.0
RATES & RATIOS
EPS
CFPS
BVPS
SPS
EBITDA/share
DPS
Source: Company data, Maybank KE estimates
15 April 2013
Page 16 of 20
Melco International Development
REGIONAL
P K BASU
Regional Head, Research & Economics
(65) 6432 1821 pk.basu@maybank-ke.com.sg
WONG Chew Hann, CA
Acting Regional Head of Institutional Research
(603) 2297 8686 wchewh@maybank-ib.com
ONG Seng Yeow
Regional Products & Planning
(65) 6432 1453 ongsengyeow@maybank-ke.com.sg
MALAYSIA
WONG Chew Hann, CA Head of Research
(603) 2297 8686 wchewh@maybank-ib.com
 Strategy
 Construction & Infrastructure
Desmond CH’NG, ACA
(603) 2297 8680 desmond.chng@maybank-ib.com
 Banking - Regional
LIAW Thong Jung
(603) 2297 8688 tjliaw@maybank-ib.com
 Oil & Gas
 Automotive
 Shipping
ONG Chee Ting, CA
(603) 2297 8678 ct.ong@maybank-ib.com
 Plantations- Regional
Mohshin AZIZ
(603) 2297 8692 mohshin.aziz@maybank-ib.com
 Aviation
 Petrochem
YIN Shao Yang, CPA
(603) 2297 8916 samuel.y@maybank-ib.com
 Gaming – Regional
 Media
TAN CHI WEI, CFA
(603) 2297 8690 chiwei.t@maybank-ib.com
 Power
 Telcos
WONG Wei Sum, CFA
(603) 2297 8679 weisum@maybank-ib.com
 Property & REITs
LEE Yen Ling
(603) 2297 8691 lee.yl@maybank-ib.com
 Building Materials
 Manufacturing
 Technology
LEE Cheng Hooi Head of Retail
chenghooi.lee@maybank-ib.com
 Technicals
HONG KONG / CHINA
Todd MARTIN Head of Research
(852) 2268 0638 toddmartin@kimeng.com.hk
 Banking & Finance
Ivan CHEUNG, CFA
(852) 2268 0634 ivancheung@kimeng.com.hk
 HK Property
 Industrial
Jacqueline KO, CFA
(852) 2268 0633 jacquelineko@kimeng.com.hk
 Consumer
Andy POON
(852) 2268 0645 andypoon@kimeng.com.hk
 Telecom & equipment
Alex YEUNG
(852) 2268 0636 alexyeung@kimeng.com.hk
 Industrial
Warren LAU
(852) 2268 0644 warrenlau@kimeng.com.hk
 Technology - Regional
Karen KWAN
(852) 2268 0640 karenkwan@kimeng.com.hk
 China Property
Jeremy TAN
(852) 2268 0635 jeremytan@kimeng.com.hk
 Gaming
INDIA
Jigar SHAH Head of Research
(91) 22 6623 2601 jigar@maybank-ke.co.in
 Oil & Gas
 Automobile
 Cement
Anubhav GUPTA
(91) 22 6623 2605 anubhav@maybank-ke.co.in
 Metal & Mining
 Capital goods
 Property
Urmil SHAH
(91) 22 6623 2606 urmil@maybank-ke.co.in
 Technology
 Media
Varun VARMA
(91) 226623 2611 varun@maybank-ke.co.in
 Banking
15 April 2013
RESEARCH OFFICES
ECONOMICS
Suhaimi ILIAS
Chief Economist
 Singapore | Malaysia
(603) 2297 8682 suhaimi_ilias@maybank-ib.com
Luz LORENZO
 Philippines | Indonesia
(63) 2 849 8836 luz_lorenzo@maybank-atrke.com
Tim LEELAHAPHAN
 Thailand
(662) 658 1420 tim.l@maybank-ke.co.th
SINGAPORE
Gregory YAP Head of Research
(65) 6432 1450 gyap@maybank-ke.com.sg
 Technology & Manufacturing
 Telcos - Regional
Wilson LIEW
(65) 6432 1454 wilsonliew@maybank-ke.com.sg
 Hotel & Resort
 Property & Construction
James KOH
(65) 6432 1431 jameskoh@maybank-ke.com.sg
 Logistics
 Resources
 Consumer
 Small & Mid Caps
YEAK Chee Keong, CFA
(65) 6432 1460 yeakcheekeong@maybank-ke.com.sg
 Offshore & Marine
Alison FOK
(65) 6432 1447 alisonfok@maybank-ke.com.sg
 Services
 S-chips
Bernard CHIN
(65) 6432 1446 bernardchin@maybank-ke.com.sg
 Transport (Land, Shipping & Aviation)
ONG Kian Lin
(65) 6432 1470 ongkianlin@maybank-ke.com.sg
 REITs / Property
Wei Bin
(65) 6432 1455 weibin@maybank-ke.com.sg
 S-chips
 Small & Mid Caps
INDONESIA
Katarina SETIAWAN Head of Research
(62) 21 2557 1125 katarina.setiawan@maybank-ke.co.id
 Consumer
 Strategy
 Telcos
Lucky ARIESANDI, CFA
(62) 21 2557 1127 lucky.ariesandi@maybank-ke.co.id
 Base metals
 Mining
 Oil & Gas
 Wholesale
Rahmi MARINA
(62) 21 2557 1128 rahmi.marina@maybank-ke.co.id
 Banking
 Multifinance
Pandu ANUGRAH
(62) 21 2557 1137 pandu.anugrah@maybank-ke.co.id
 Automotive
 Heavy equipment
 Plantation
 Toll road
Adi N. WICAKSONO
(62) 21 2557 1128 adi.wicaksono@maybank-ke.co.id
 Generalist
Anthony YUNUS
(62) 21 2557 1139 anthony.yunus@maybank-ke.co.id
 Cement
 Infrastructure
 Property
Arwani PRANADJAYA
(62) 21 2557 1129 arwani.pranadjaya@maybank-ke.co.id
 Technicals
THAILAND
Sukit UDOMSIRIKUL Head of Research
(66) 2658 6300 ext 5090
Sukit.u@maybank-ke.co.th
Maria LAPIZ Head of Institutional Research
Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
Maria.L@maybank-ke.co.th
 Consumer/ Big Caps
Andrew STOTZ Strategist
(66) 2658 6300 ext 5091
Andrew@maybank-ke.co.th
Mayuree CHOWVIKRAN
(66) 2658 6300 ext 1440 mayuree.c@maybank-ke.co.th
 Strategy
Suttatip PEERASUB
(66) 2658 6300 ext 1430 suttatip.p@maybank-ke.co.th
 Media
 Commerce
Sutthichai KUMWORACHAI
(66) 2658 6300 ext 1400 sutthichai.k@maybank-ke.co.th
 Energy
 Petrochem
Termporn TANTIVIVAT
(66) 2658 6300 ext 1520 termporn.t@maybank-ke.co.th
 Property
Woraphon WIROONSRI
(66) 2658 6300 ext 1560 woraphon.w@maybank-ke.co.th
 Banking & Finance
Jaroonpan WATTANAWONG
(66) 2658 6300 ext 1404 jaroonpan.w@maybank-ke.co.th
 Transportation

Small cap.
Chatchai JINDARAT
(66) 2658 6300 ext 1401 chatchai.j@maybank-ke.co.th
 Electronics
Pongrat RATANATAVANANANDA
(66) 2658 6300 ext 1398 pongrat.R@maybank-ke.co.th
 Services/ Small Caps
VIETNAM
Michael KOKALARI, CFA Head of Research
(84) 838 38 66 47 michael.kokalari@maybank-kimeng.com.vn
 Strategy
Nguyen Thi Ngan Tuyen
(84) 844 55 58 88 x 8081 tuyen.nguyen@maybank-kimeng.com.vn
 Food and Beverage
 Oil and Gas
Ngo Bich Van
(84) 844 55 58 88 x 8084 van.ngo@maybank-kimeng.com.vn
 Banking
Trinh Thi Ngoc Diep
(84) 844 55 58 88 x 8242 diep.trinh@maybank-kimeng.com.vn
 Technology
 Utilities
 Construction
Dang Thi Kim Thoa
(84) 844 55 58 88 x 8083 thoa.dang@maybank-kimeng.com.vn
 Consumer
Nguyen Trung Hoa
+84 844 55 58 88 x 8088 hoa.nguyen@maybank-kimeng.com.vn
 Steel
 Sugar
 Resources
PHILIPPINES
Luz LORENZO Head of Research
(63) 2 849 8836 luz_lorenzo@maybank-atrke.com
 Strategy
Laura DY-LIACCO
(63) 2 849 8840 laura_dyliacco@maybank-atrke.com
 Utilities
 Conglomerates
 Telcos
Lovell SARREAL
(63) 2 849 8841 lovell_sarreal@maybank-atrke.com
 Consumer
 Media
 Cement
Kenneth NERECINA
(63) 2 849 8839 kenneth_nerecina@maybank-atrke.com
 Conglomerates
 Property
 Ports/ Logistics
Katherine TAN
(63) 2 849 8843 kat_tan@maybank-atrke.com
 Banks
 Construction
Ramon ADVIENTO
(63) 2 849 8845 ramon_adviento@maybank-atrke.com
 Mining
Page 17 of 20
Melco International Development
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as
an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and
that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings.
Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related
information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum
invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not
take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors
should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or
recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of
this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees
(collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this
report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”,
“intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be
achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are
subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements.
Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any
such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of
unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law,
from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other
investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent
permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One
or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in
whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for
the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country
or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such
circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of
investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical
location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental
ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia
Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank
KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact
Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited
investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand
and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the
Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand)
Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result.
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET.
MBKET accepts no liability whatsoever for the actions of third parties in this respect.
US
This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the
Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US
(registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in
the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the
US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You
should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant
legislation and regulations.
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial
Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the
Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take
any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as
constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
15 April 2013
Page 18 of 20
Melco International Development
DISCLOSURES
Legal Entities Disclosures
Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa
Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued
and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim
Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand:
MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and
Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the
Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities
Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities
India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange
(Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker
(Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL
(Reg No 2377538) is authorized and regulated by the Financial Services Authority.
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further
act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment
banking services, advisory and other services for or relating to those companies.
Singapore: As of 15 April 2013, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the
research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors,
connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.
Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph
16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
As of 15 April 2013, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in
issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or
investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the
companies covered in this report.
OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of
the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political
factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of
any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its
own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system:
BUY
Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD
SELL
Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable
to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do
not actively follow developments in these companies.
Some common terms abbreviated in this report (where they appear):
Adex = Advertising Expenditure
BV = Book Value
CAGR = Compounded Annual Growth Rate
Capex = Capital Expenditure
CY = Calendar Year
DCF = Discounted Cashflow
DPS = Dividend Per Share
EBIT = Earnings Before Interest And Tax
EBITDA = EBIT, Depreciation And Amortisation
EPS = Earnings Per Share
EV = Enterprise Value
15 April 2013
FCF = Free Cashflow
FV = Fair Value
FY = Financial Year
FYE = Financial Year End
MoM = Month-On-Month
NAV = Net Asset Value
NTA = Net Tangible Asset
P = Price
P.A. = Per Annum
PAT = Profit After Tax
PBT = Profit Before Tax
PE = Price Earnings
PEG = PE Ratio To Growth
PER = PE Ratio
QoQ = Quarter-On-Quarter
ROA = Return On Asset
ROE = Return On Equity
ROSF = Return On Shareholders’ Funds
WACC = Weighted Average Cost Of Capital
YoY = Year-On-Year
YTD = Year-To-Date
Page 19 of 20
Melco International Development
Malaysia

Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank,
100 Jalan Tun Perak,
50050 Kuala Lumpur
Tel: (603) 2059 1888;
Fax: (603) 2078 4194
Stockbroking Business:
Level 8, Tower C, Dataran Maybank,
No.1, Jalan Maarof
59000 Kuala Lumpur
Tel: (603) 2297 8888
Fax: (603) 2282 5136
Singapore

Maybank Kim Eng Securities Pte Ltd
Maybank Kim Eng Research Pte Ltd
9 Temasek Boulevard
#39-00 Suntec Tower 2
Singapore 038989

Hong Kong

Kim Eng Securities (HK) Ltd
Level 30,
Three Pacific Place,
1 Queen’s Road East,
Hong Kong
Tel: (852) 2268 0800
Fax: (852) 2877 0104
Philippines

Maybank ATR Kim Eng Securities
Inc.
17/F, Tower One & Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1200
Maybank Kim Eng Securities
(Thailand) Public Company
Limited
999/9 The Offices at Central World,
20th - 21st Floor,
Rama 1 Road Pathumwan,
Bangkok 10330, Thailand
Tel: (63) 2 849 8888
Fax: (63) 2 848 5738
Tel: (66) 2 658 6817 (sales)
Tel: (66) 2 658 6801 (research)
South Asia Sales Trading

Kevin FOY
kevinfoy@maybank-ke.com.sg
Tel: (65) 6336-5157
US Toll Free: 1-866-406-7447


15 April 2013

Indonesia
PT Kim Eng Securities
Plaza Bapindo
Citibank Tower 17th Floor
Jl Jend. Sudirman Kav. 54-55
Jakarta 12190, Indonesia

Vietnam
In association with
Maybank Kim Eng Securities JSC
1st Floor, 255 Tran Hung Dao St.
District 1
Ho Chi Minh City, Vietnam
Tel : (84) 844 555 888
Fax : (84) 838 38 66 39
New York
Maybank Kim Eng Securities USA
Inc
777 Third Avenue, 21st Floor
New York, NY 10017, U.S.A.
Tel: (212) 688 8886
Fax: (212) 688 3500

Tel: (62) 21 2557 1188
Fax: (62) 21 2557 1189
Thailand

Maybank Kim Eng Securities
(London) Ltd
6/F, 20 St. Dunstan’s Hill
London EC3R 8HY, UK
Tel: (44) 20 7621 9298
Dealers’ Tel: (44) 20 7626 2828
Fax: (44) 20 7283 6674
Tel: (65) 6336 9090
Fax: (65) 6339 6003

London
India
Kim Eng Securities India Pvt Ltd
2nd Floor, The International 16,
Maharishi Karve Road,
Churchgate Station,
Mumbai City - 400 020, India
Tel: (91).22.6623.2600
Fax: (91).22.6623.2604

Saudi Arabia
In association with
Anfaal Capital
Villa 47, Tujjar Jeddah
Prince Mohammed bin Abdulaziz
Street P.O. Box 126575
Jeddah 21352
Tel: (966) 2 6068686
Fax: (966) 26068787
North Asia Sales Trading

Eddie LAU
eddielau@kimeng.com.hk
Tel: (852) 2268 0800
US Toll Free: 1 866 598 2267


www.maybank-ke.com | www.maybank-keresearch.com | www.kimeng.com.hk
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