GGRAsia – MGM China 1Q EBITDA down 46pct y-o-y

MGM China 1Q EBITDA down 46pct y-o-y

May 03, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator MGM China Holdings Ltd saw its first-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fall 45.8 percent, to HKD45.7 million (US$5.8 million), from HKD84.4 million in the same period of 2021, the firm said in a Hong Kong filing on Monday.

The result was down 48.6 percent from the fourth quarter of 2021.

The firm runs the MGM Macau casino resort on Macau peninsula, and the MGM Cotai complex (pictured) on Cotai. MGM China’s results were released in tandem with the earnings of the parent MGM Resorts International.

The MGM Macau property achieved adjusted EBITDA of HKD153.2 million in the three months to March 31, down by 9.8 percent in year-on-year terms, but up 60.5 percent from the previous three months. MGM China said the property’s adjusted EBITDA for the latest quarter included “a reversal of provisions of HKD60.6 million, as result of the final settlement of certain litigations related to the group’s joint liability with gaming promoters,” as disclosed in MGM China’s 2021 annual report.

According to recent statements by Macau gaming operators, the industry’s cooperation with Macau-licensed junkets was largely paused with effect from the fourth quarter of 2021. That coincided with two high-profile figures in the local junket segment being detained in Macau, on suspicion of facilitating illegal forms to gambling.

The MGM Cotai property reported negative adjusted EBITDA to the tune of HKD107.5 million. That compared to negative adjusted EBITDA of HKD85.6 million in the first quarter of 2021, and a negative result of HKD6.4 million for the three months ended December 31, 2021.

MGM China’s first-quarter total revenue was HKD2.09 billion, down 8.9 percent on the same quarter in 2021. The firm’s total revenue for the first three months of 2022 declined 14.6 percent sequentially. Parent MGM Resort said “the current and prior year quarter were significantly impacted by travel and entry restrictions in Macau” related to the Covid-19 pandemic.

Due to social distancing measures as a result of the Covid-19 pandemic, slot machines at MGM Macau and MGM Cotai “were operated at a reduced capacity” during the reporting period, said MGM China.

Mass-market table games drop – money exchanged for chips – at MGM Macau was HKD5.19 billion in the first quarter, up 11.0 percent year-on-year. Such drop was HKD5.31 billion in the fourth quarter.

VIP table games turnover at MGM Macau was down 65.9 percent year-on-year in the first quarter, at HKD3.55 billion. In the three months ended December 31, such turnover was HKD8.07 billion.

At MGM Cotai, first-quarter mass-market drop was HKD3.37 billion, down 1.6 percent year-on-year. Fourth-quarter mass-market drop at the property had stood at HKD3.76 billion.

VIP table games turnover at MGM Cotai was down 50.5 percent year-on-year in the first quarter, at slightly under HKD4.00 billion. For the fourth quarter of last year, such turnover was HKD5.46 billion.

The parent, MGM Resorts, reported a net loss of US$18.0 million for the first three months of 2022, compared to a net loss of US$331.8 million in the prior year quarter.

Separately, MGM Resorts announced on Monday an offer to acquire global online gaming company LeoVegas AB for a total tender value of approximately US$607 million.

The parent of MGM China closed last week previously-announced transactions with VICI Properties Inc and MGM Growth Properties LLC whereby VICI redeemed a majority of the MGM Growth Properties operating partnership units held by MGM Resorts, for approximately US$4.4 billion in cash, and acquired 100 percent of MGM Growth Properties.

MGM Growth Properties is a real estate investment trust (REIT) specialised in casino properties. VICI Properties is a rival REIT, originally formed in 2017 as a spin-off from U.S.-based casino operator Caesars Entertainment Corp.