with only $3 million in the fourth quarter of 2009. Melco?s results were even more impressive in light of the strong growth being driven entirely by the company?s existing casinos and not by the opening of new casinos, and with growth exceeding the 52% growth in Macau gaming industry revenue for the fourth quarter.

For the full year, net revenue doubled to $2.6 billion, with adjusted EBITDA increasing to $406 million, compared with negative EBITDA of $43 million in 2009. On the basis of the strong revenue growth and increased market share during the quarter, improved EBITDA margins, and our expectation of higher growth in the Macau gaming market relative to our expectations last year, we are placing Melco Crown under review while we adjust our model to reflect higher expected net revenue growth and transfer coverage to another analyst.. We expect our adjustments will lead to an increased fair value estimate.

The increase in net revenue during the quarter was driven by a 106% lift in net revenue to $489 million at the City of Dreams casino, combined with an 85% increase in net revenue to $245 million at the Altira casino. Growth at City of Dreams was driven by a 65% gain in VIP rolling chip volume and a hold percentage of 2.9% during the quarter, compared with 2.4% the prior year. City of Dreams' mass market drop increased 35%, with the win rate at 22% compared with 17.2% in the year-ago period. VIP rolling chip volume at Altira increased 28%, with an improvement in the hold percentage to 2.9% from 2.3%. The mass market drop at Altira increased 98%, with the win rate at 14.7% compared with 18.8% in the prior year.

Management indicated that it expects VIP rolling chip hold percentages of 2.7%-3.0% and mass market win rates of 20%-22% at City of Dreams and 15%-17% at Altira.

Adjusted EBITDA margins were 17% in the fourth quarter, compared with 18.7%, 12.7%, and 15.3% in the first, second, and third quarters, respectively, and 0.3% in the fourth quarter of 2009. The improvement in EBITDA margins in 2010 was driven by leveraging operating expenses and tighter expense controls.

With Macau gaming revenue up 33% in January and the opening of the new Galaxy Macau casino on the Cotai Strip delayed to the second quarter, we expect Melco Crown to generate continued strong revenue and EBITDA growth in the first and second quarters of 2011. We expect Melco's net revenue growth rate to decline significantly in the second half of the year due to increased competition from Galaxy Macau and more moderate growth in the Macau gaming industry.

Source: http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNERN1_oly9BkpILrmWtsx-jh0xheA&url=http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid=371399

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