GGRAsia – Mass drives MGM China 1Q revenue up to US$296mln

Mass drives MGM China 1Q revenue up to US$296mln

Apr 29, 2021 Newsdesk Latest News, Macau, Top of the deck, World

Macau casino operator MGM China Holdings Ltd saw its revenue for the first three months of 2021 rise by 8.8 percent year-on-year, to nearly HKD2.30 billion (US$296.4 million). The increase was mainly supported by a growth in the mass-market segment, according to the quarterly earnings filing of the parent company, United States-based MGM Resorts International.

MGM China’s net revenue for the three months to March 31 was down 2.6 percent sequentially, according to Wednesday’s filing.

In a presentation issued alongside the results, the parent company said MGM China had “outperformed” the local market, with its first-quarter gross gaming revenue (GGR) recovering to about 40 percent of pre-pandemic levels.

The Macau unit reported adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of about HKD84.4 million for first-quarter 2021.

It was the second consecutive quarter of positive EBITDA, after three quarters of losses. The Hong Kong-listed company had reported negative adjusted property EBITDA to the tune of HKD122.7 million a year earlier.

The first-quarter EBITDA was however down nearly 88 percent sequentially, with MGM Resorts blaming the lower mass market win rate for such result.

MGM China runs two casino resorts in Macau: MGM Macau on the city’s peninsula, and MGM Cotai (pictured, centre), in Macau’s Cotai district.

Andrew Lee of Jeffries Group LLC said in a Thursday note that MGM China’s first-quarter results “missed due to mass underperforming with EBITDA for both properties lower than consensus, especially MGM Cotai which returned to negative EBITDA.”

The analyst added: “Stripping out US$23 million bonus accrual reversal in fourth-quarter 2020, EBITDA margins declined to 2 percent in first-quarter 2021, from 6 percent in fourth-quarter 2020 with mass table games drop sequentially lower, especially in MGM Cotai. We believe this could be due to competition from the opening of The Londoner.” The Londoner Macao is a revamped property operated by Macau market-rival Sands China Ltd, which had its first-phase opening in early February.

Mass-market shining

MGM China’s main floor table games drop rose 34.4 percent year-on-year, to nearly HKD8.10 billion. Revenue in the segment was HKD1.78 billion, up 22.3 percent from the prior-year period.

MGM China saw its VIP table games turnover fall by 30.7 percent year-on-year to HKD18.41 billion. The operator’s VIP revenue fell by 28.4 percent from the first quarter of 2020 to HKD606.2 million, despite a win percentage of 3.3 percent, at the high-end of the normal range.

According to Wednesday’s presentation, MGM Macau recorded positive EBITDA of HKD170.0 million for the first quarter of 2021, almost five times higher than a year earlier. It was nonetheless down from HKD247.1 million in the final quarter of 2020.

MGM Macau saw its mass market table games drop rise 36.9 percent year-on-year to HKD4.67 billion. It was enough to offset a one-third fall in VIP table games turnover, to HKD10.4 billion

The casino firm said MGM Cotai posted negative EBITDA of HKD85.6 million in first-quarter 2021. That was down from HKD120.1 million EBITDA in the three months to December 31, but still an improvement from the HKD156.8-million EBITDA loss posted a year earlier.

The Cotai property also saw VIP table games turnover suffer a 26 percent year-on-year decrease to HKD8.0 billion. Better signs came from the mass market tables, where bets grew to HKD3.43 billion, up by 30.4 percent from the first quarter of 2020.

MGM Resorts said that – as of March 31 – it had cash and cash equivalents of US$4.9 billion, which included US$1.09 billion at MGM China. The Macau unit also had US$747 million available under a revolving credit facility after it issued senior notes in March.

MGM Resorts recorded consolidated net revenue of US$1.6 billion in the opening quarter of 2021, a 27 percent decrease from the prior-year quarter. Consolidated adjusted earnings before interest, taxation, depreciation, amortisation, and restructuring or rent costs (EBITDAR) decreased 26.1 percent year-on-year, to US$218 million in the first quarter of 2021.

Net loss attributable to MGM Resorts reached US$332 million in the first three months this year, compared with an income of US$807 million in the prior-year quarter. Such result last year included a US$1.5-billion gain related to a real estate transaction involving the MGM Grand Las Vegas and Mandalay Bay properties.