Harrah’s May Team up With Melco PBL
Written on September 17, 2007 by admin
Melco PBL shares rose 7% Thursday after an analyst speculated that the company could eventually team up with Harrah’s on a Macau casino.
Any partnership deal would provide a strong boost for Melco, a casino operator in Macau.
Late Wednesday, Harrah’s said it had purchased Macau Orient Golf Resort, which totals over 100 acres on the Cotai Strip section of Macau, the Chinese island that is the world’s largest casino market.
While Harrah’s currently says it plans to keep the site open as a golf course, many industry analysts expect a casino to eventually be built on the property. Harrah’s does not hold any of the six casino licenses in Macau.
As an alternative to holding the license, it could build the property and bring in a management partner. Melco would be likely to receive the management deal, according to a research note published late Wednesday by JPMorgan analyst Harry Curtis.
The golf course site is located across from eSun’s Macau Studio City development, which Melco also will manage when the project opens in 2009. A deal with Harrah’s could allow Melco to “earn a management fee with zero invested capital,” Curtis wrote in his note.
Melco could not be reached for comment.
If a partnership were to be formed, it likely would be several years away. But if such a deal comes to fruition, it would provide a very attractive additional earnings stream for Melco.
Melco shares slumped over the summer because of credit facility fears and a botched opening of its first casino, Crown Macau. But the shares have rebounded in recent weeks, and investors should be in for better months ahead. The strong opening of Las Vegas Sands’ Venetian Macau in late August is boosting overall demand for the region.
Melco shares were up 6.8%, or 94 cents, to $14.77 in afternoon trading. Shares are right near where I recommended buying them in mid-March at $15.46. I continue to expect that this stock will see considerable upside over the next 12 months.
Source : The Street
Technorati Tags: cotai, Cotai Strip, Crown Macau, Entertainment, macau, Macau Casino, Melco Crown
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