Ross Dunwoody - Vice President, Investor Relations Lawrence Ho - Chairman and Chief Executive Officer Geoffrey Davis - Executive Vice President and Chief Financial Officer David Sisk - Chief Operating Officer Gabe Hunterton - Property President, City of Dreams, Macau.

Karen Tang - Deutsche Bank Kenneth Fong - Credit Suisse Billy Ng - Bank of America Merrill Lynch Jon Oh - CLSA Grant Govertsen - Union Gaming.

Ladies and gentlemen thank you for standing by and welcome to the Fourth Quarter 2016 Melco Crown Entertainment Limited Earnings Conference Call. At this time, all participants are in a listen-only-mode. There will be a presentation followed by Question-and-Answer Session.

[Operator Instructions] I must advice you that this call is being recorded by 16 February, 2017. I would now like to hand the conference over to your first speaker today Mr. Ross Dunwoody. Thank you and please go ahead..

Thank you for joining us today for our fourth quarter 2016 earnings call. On the call today are Lawrence Ho; Geoff Davis and our Property President in Macau and Manila. Before we get started, please note that today’s discussion may contain forward looking statement made under the Safe Harbor provision of Federal Securities laws.

Our actual results could differ from our anticipated results. I will now turn the call over to Lawrence..

Thanks Ross. Hello everyone. In the fourth quarter of 2016, our group wide property EBITDA increased by approximately 29% year-over-year driven by record mass stable gains revenue in Macau and an increasingly impressive contribution from City of Dreams Manila.

Our strong performance during the quarter comes at a time of significant and exciting change for MTE. We have undertaken a range of management changes that creates a more streamlined and efficient organizational structure and are taking greater control of the company’s day-to-day operations.

These changes will allow us to be more dynamic and responsive to the rapidly changing needs of the Macau and Manila markets. I am confident that the current management team can drive further growth and profitability, realizing the full potential of the world-class properties that we own an offering.

In December 2016, Melco International one of MCE’s sounding shareholders and a company of I am chairman and CEO announced the acquisition of a 13.4% interest from town resorts. Following the completion of this transaction earlier today, I am pleased to say that Melco is now the companies majority shareholder earnings over 51% of MTE.

This significant increase in ownership highlights the strong confidence and commitment I have in this company including its impressive portfolio of world-class properties in the most exciting markets in the world.

As well as confident in employees and management team to deliver a unique and multi-faceted gaming and non-gaming experience to our customers. We also recently celebrated MCE’s 10th anniversary on NASDAQ.

This is a tremendous achievement for our company which has grown from a handful of employees just over 10 years ago to one of the largest global gaming companies with almost 20,000 employees and some of the best integrated resorts in world.

Last month, we announced an update to our dividend policy to ensure that we deliver a larger and more stable quarterly dividend payout.

And also announced a US$650 million special dividend, which highlights our company’s strong cash position and cash flow generating ability, which has enabled us to return surplus capital to shareholders while still investing in our business. Returning to our recent quarterly results.

Our Macau property EBITDA increased by 15% year-over-year to US$254 million, while margins expanded over a 150 basis points compared to the prior quarter. Our flagship property in Macau, City of Dreams delivered strong improvements in gaming volumes compared to the prior quarter, resulting in a sequential increase in EBITDA of over 10%.

Our ability to grow above our top and bottom-line at City of Dreams in a market that is absorbing new supply is a testament to the properties’ market leading position in premium segments of the market. We also recently unveiled Morpheus hotel brand.

The latest addition to the City of Dreams which offers a truly unique and groundbreaking hotel concepts that will ensure that property remains at the pinnacle of [indiscernible].

Morpheus is contemporary design and architecture highlights MCEs ongoing commitment to our customers to deliver a sophisticated never seen before experience while also delivering on our significant commitment and contribution to Macau by creating another marky landmark.

At Studio City we are pleased with the performance of our newly opened VIP operations, which provides a strong complement for the [indiscernible] expanding mass gaming business. We anticipate a further ramp in the top [indiscernible] operations in the coming quarters. While the addition of rolling chip operations at Studio City [indiscernible].

The key driver of success will remain the mass market leveraging this property’s entertainment attraction and other investment cap in class non-gaming amenities to deliver an exciting experience to a broad spectrum of customers.

In Manila, City of Dreams continue to deliver improved volume across all gaming segment with our efforts to maximize table yields, optimize reinvestment and manage operating expenses resulting in an increased of share of the VIP and mass gaming market while remaining disciplined on cast which in turn is delivered another record quarter.

Our decision to invest in the Philippines which continues to be the fastest growing gaming market in the world is a testament to our company's commitment to identify and commit to new markets or develop an opportunity that meet our stringent investment criteria and allows us to expand our gaming and non-gaming network around the region.

With that, I turn the call the call over to Geoff, to go through some of the numbers..

Thanks Lawrence we reported group wide property EBITDA of approximately $304 million in the fourth quarter of 2016 expanding by 5% from the prior quarter and up almost 29% from the fourth quarter of 2015.

Luck-adjusted Macau property EBITDA increased almost 10% sequentially and by approximately 22% on a year-over-year basis to approximately $275 million in the fourth quarter of 2016. The Luck-adjusted property EBITDA margin in Macau was approximately 25% up from approximately 24% in both the third quarter of 2016 and fourth quarter of 2015.

In Macau we were negatively impacted by a low VIP win rate at City of Dreams of approximately $15 million and at Studio City we were negatively impacted by approximately $8 million.

If we had held that theoretical VIP win rate of 2.85% City of Dreams would have generated EBITDA of approximately $205 million, while Studio City would have delivered record EBITDA of approximately $65 million during the quarter.

The EBITDA contribution from our non-VIP segments continues to represent approximately 95% of Luck-adjusted EBITDA at City of Dreams Macau and on a Macau wide basis. City of Dreams Manila delivered total property EBITDA of $50 million representing an increase of 12% sequentially and 224% year-over-year.

The property EBITDA margin expanded to almost 35% in the fourth quarter of 2016 compared to 34% in the prior quarter and 19% in the same period last year.

On a Luck adjusted basis Manila's property EBITDA would have been approximately $45 million representing an approximately 25% sequential increase with Luck-adjusted EBITDA margins expanding by approximately 260 basis points sequentially.

As mentioned by Lawrence, following the review of our capital structure and dividend policy the board has authorized an increase in the normal quarterly dividend payment to $0.09 per ADS beginning from the fourth quarter of 2016 delivering to shareholders of larger, more stable and predictable quarterly returns of capital.

In addition we declared a $650 million special dividend in January of this year. The special dividend and revised dividend policy reflects our commitment to returning surplus capital while retaining significant flexibility to pursue future growth opportunities, which we believe will deliver long-term value to our shareholders.

We will continue to review our ordinary dividend policy with a view to increasing this regular payout overtime, taking into account our levels of cash, future cash flows and develop on opportunities.

In December of last year, we effectively replaced Studio City’s existing bank facilities with a 350 million, three year and 850 million five year senior notes offering resulting in a capital structure which is more aligned to Studio City’s anticipated ramp and cash flows.

This new capital structure carries no testing of maintenance covenants and has no amortization. As we normally, we will give you some guidance on non-operating line items for the upcoming quarter.

Total depreciation and amortization expenses is expected to be approximately $135 million to $140 million including approximately $47 million at Studio City.

Corporate expense is expected to come in at approximately $31 million to $33 million and consolidated net interest expense is expected to be approximately $68 million which includes finance, lease and interest of $10 million relating to City of Dreams Manila, net to approximately $9 million of total capitalized interest.

For those that follows City of Dreams Manila more closely our building lease payments for the fourth quarter of 2016 was approximately $8 million. That concludes our prepared remarks. Operator, back to you for the Q&A..

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions]. Your first quarter comes from the line of Karen Tang of Deutsche Bank. Please as your question..

Hey guys this is Karen Tang here. I have two questions, the first question is probably for David Sisk if he is on the call. Welcome to the Melco Crown conference call and I understand that David has a very long history of managing bigger properties in Macau.

So I understand this is too early state for you to be at Studio City, but after few months, what are things that you will have to change, roughly what would those things be? Is it more on the implementation or is it on the corporate cost side, more rationalization.

My second question is with regards to the upcoming legislature on smoking bans, particularly with regards to City of Dreams. How is the company looking to make changes to after the potential smoking ban. Thank you..

David, why don’t you answer the first one and I’ will take the second one..

Great. So hi Karen its David. I think one of the things I had noticed is its really more about kind of getting the teams focus.

When I was at SANDS, we kind of did the same thing, but it became more about listening to the team, trying to identify some of the good ideas whether it was from a cost containment standpoint or revenue enhancement, but it was really more about communication and listening and kind a putting those things into place, into practice.

And I think we have seen some good results to that in the first few months that we have been doing that and I think as you go forward here and look out towards 2017 and beyond, I think you will see those results even get better..

And Karen it's Lawrence here. Naturally City of Dreams in Macau isn’t the only property where smoking takes place in some of the ground floor gaming facilities. But I think our competitive edge over the years and maybe I will let Gabe elaborate a bit more later on. Is that we have been more completing property in terms of premium mass.

And during the year we have also upgraded our entire retail complex and next year we are opening Morpheus as well.

So our goal is to maintaining our leading position and at the same time we are very happy with the sales team that we have involved and so ultimately the market especially on the high end of the [gaming] (Ph) mass market is really about the product and service.

And with our market leading Michelin stars and market leading Forbes 5-stars we are very confident that we can maintain that edge.

I don't know you have anything to add Gabe?.

No I agree. I think we have a great deal of additional assets at our disposals and coming online soon and I absolutely agree that we can maintain that edge..

Lovely, that’s all. Thank you and Gabe welcome back in Macau..

Thank you Karen..

And your next question comes from the line of Kenneth Fong from Credit Suisse. Please ask your question..

Hi thanks guys. Thanks letting in my questions and congratulations on the very solid results. All right, I have two questions, first is how do you think about in terms of the degree and the pace of ramp up going forward for Studio City.

If we were to put in a percentage are we like 60% 70% then or how do we think about in terms of the mass potential going forward for the Studio City? And the second thing is we have recently seen VIP and also premium mass gradually picking up what is your outlook over the next few quarters. I know visibility couple of especially for the VIP.

But in terms of payer mix spend that you see over the past few months and try to recovery. How do you project and think about it in terms of growth rate going into the next few quarter. Thank you..

Hey Kenneth it's Lawrence here. So I think rather than answering the question in order, why don't I begin by saying, I think everybody knows that for the last six months Macau has had growth, which is very exciting for all of us. But at the same time, we recently had Chinese New Year and I would classify Chinese New Year as it was as expected.

It was an blow or phenomenal at the same time having Macau has become a much more mature market compared to previously. So you will see less peaks and certainly less falls. And so I think all-in-all the market is recovering, we all seeing a broad recovery. And we are excited for that.

I think some of the key metrics in looking at the fact that in the last six months we have had a significant increase in hotel supply, but yet occupancy continues to increase. So I think these are all very bullish signals going forward. But at the end, it’s still early its only February so we are certainly not going to be revising our forecast.

So I think we stick to our thinking which is for the full-year, Macau would be from our standpoint a mid to high single-digit growth rate which is extremely positive. In terms of Studio City, maybe I will hand it off to David to give more highlights in terms of brand.

But again you know Studio City when we first opened, we were hampered by access and access in our business has probably been most important factor.

We were blocked on one side by provision and we are still blocked on the other side by the lowest deconstruction of the light rail station from the Macau government, which blocks the access from the Lotus Bridge to Studio City.

Once that access and the government is indicatively telling us that hopefully by the end of the year that the Light Rail station will be completed and so once that access point has improved, I think there is significant visitation that will come about you know in terms of more details, I will hand it to David..

Yes, I think Kenneth, I think one of the key things, there is only being fed by two locations growing on property from the back of the property which really is that bus entry and from the Northeast corner which is on the fruition side. We’re missing a big piece in terms of from the Lotus Bridge that Lawrence just talked about.

We are really hopeful that the governments is going to get that open for us by the end of the year, if not hopefully sometime in the first quarter of 2018. In terms of the ramp, I think we have still got ways to go.

I think part of our ramp process is also been not only bringing players in, but also trying to get more out of those players, increasing playing time, increasing the amount of money that they bet, increasing the level of frequency that we have with these players.

So it’s really trying to optimize our database more and working within our team to try to continue to build these players within our group here.

What we have also tried to look to do too is take advantage of the traffic that we do have and kind of refocus the casino, improving sight lines, moving tables and identifying locations where we can create some more compression for the players..

Got it. Thank you very much and congrats again..

Thanks a lot, Kenneth..

Your next question comes from Billy Ng of Bank of America Merrill Lynch. Please ask your question..

Hi, good evening. First of all, I just want to congratulate also on the very solid results. I just have one question, I think there is some recent concern about the market trend mainly thinking that the growth is driven more by VIP rather than mass.

But can you tell us what you have seen in particular so far in Chinese New Years in terms of growth rates between mass and VIP.

How much difference are we seeing, is that really VIP dominant and mass has slowed down or the growth is not really that significant difference?.

Hey Billy its Lawrence, let me try and take a crack at that. I think VIP has surprised in terms of its recovery, but at the same time, ultimately the future of Macau is going to be pinned on the growth of the mass market, and from our property standpoint, I think both City of Dreams and Studio City have continued to grow mass very nicely.

Yes, in terms of looking at the VIP business and Studio City has had a very nice ramp up in terms of the VIP business. And the VIP business at City of Dreams has also picked up. But ultimately our focus is still going to be on mass going forward..

Thanks..

Your next question comes from the line of Jon Oh of CLSA. Please ask your question..

Hi thanks. I apologize if there is a little bit of noise from my phone, because I'm taking the call from the outside. But I wanted to ask two questions if I may.

First of all Lawrence to follow-up on the point on some of this recent recovery in VIP that you have seen, what would say in your mind are some of the catalysts that is driving to surprise especially since it only occurred let's say three to four months ago.

What actually really happened within China or within the broader macro in that regions that caused the surprising VIP.

And if I can talk with the second question on the cost structure, are you guys comfortable with your cost structure across both CoD and also Studio City as and do you seeing any meaningful room for you to be more judicious with your daily OpEx rate.

And if you could also remind us on where you stand right now your daily OpEx for [indiscernible] and also CoD. Thank you..

Hey Jon why don’t I take the first part of your question and then Geoff can handle the cost side. I think for Macau's recovery and the main recovery in VIP and to a lesser extent premium mass is really over the last few months maybe even the last year the anti-corruption and anti-extravagant crackdown in China has subsided.

So our customers and the people who really did nothing wrong over these years are - they don't have a fear of coming to Macau, so we are seeing that and I think that is by far in a way the main reason for the recovery. And at the same time I think that the Macau has gone through significant consolidation and the junket factor.

And so the remaining junket operators now all have much better financial base to build upon. And having the confidence of a genuine return of demand from players, we see that junket operators are also a bit more - becoming more aggressive in terms of liquidity.

So I think all-in-all it's a good story for Macau both on the mass and VIP side, because the fear from avoiding the aspirational lifestyle in China we were seeing kind of an end to that..

So this is Geoff on the OpEx question. Our daily OpEx sequentially from 3Q to 4Q was roughly flat. That being said, we do see meaningful opportunities for cost reductions in the same way we were able to reduce the cost base and overhead earlier in 2016, we see similar opportunities this year in 2017 that will happen over the course of this year.

But we do see improvements in efficiency and reduction in overhead..

Okay. Thank you..

We have a question from the line of [indiscernible] of Barclays.

Please ask your questions?.

Hi gentlemen good morning and thank you very much for the call. Two questions from me. Firstly, curious to share your thoughts on the VIP roll-out at Studio City how has that turned out and is there scope to add more tables, so that’s the first quarter. The second question is with regards to the Studio City bonds.

Obviously the bond issuance last year has been not very well. Curious to hear what your thoughts on the 2020 bond refinancing? Thank you..

Maybe I will take that first question and then. So on Studio City, I think the Studio City’s rolling chip operations have outperformed our expectations, particularly on a table yield basis. So given the strength of the rolling chip performance at the property. I think we are open to the possibility of adding more VIP tables to the property..

This is Geoff. On the 2020 bonds, as you know we did a refinancing earlier or late last year, very successful that we think that puts Studio City on much better footing with a good foundation for growth going forward.

We are always looking to be opportunistic when it comes to our capital position but no plans at the moment for any activity on the 2020..

Thank you very much..

Your next question comes from the line of Grant Govertsen of Union Gaming. Please ask your question..

Hey guys, great that you are generally more a premium focus across your entire portfolio. Could you give a little color on what you are seeing in terms of relative growth rates between premium mass and what you would consider a lower tier non-premium mass.

And then a second question I had was just a follow-up on VIP at Studio City, the economics there, are those broadly in-line with what you are paying at Altira and CoD or incentives are a little bit higher there? Thank you..

Geoff, do you want to take the Studio City VIP question?.

Sure. So the economics at Studio City at a property level as reported are similar to what we across the group. Of course, we have a mechanism in place for the gaming session to operate all the tables mass and VIP at Studio City and certain costs are associated with that operation.

The cost associated with VIP are higher than mass and that needs to be taken into consideration for Studio City, but outside of that the economics would be similar to what you see on other properties..

Grant on the first question, you know I think that entire market is trending in the right direction.

So and of course as I alluded to earlier on that the market is much more mature now, the mass contribution with regards to the market is over 50% and so if you breakdown premium mass and general mass and not all operators break it out, but based on our experience and what we are seeing is both are growing at a similar growth rate..

Understood. Thank you..

There are no further questions at this time. I would now like to hand the conference back to today’s presenter. Please continue..

Yes thank you operator and thank you everyone for joining. We will be back to you in three months..

Thank you. Ladies and gentlemen that does conclude your conference for today. Thank you for participating and you may all disconnect..