GGRAsia – MGM China 3Q net revenue up 10pct q-o-q, to US$813mln

MGM China 3Q net revenue up 10pct q-o-q, to US$813mln

Nov 09, 2023 Newsdesk Latest News, Macau, Top of the deck

Quarterly net revenues at Macau casino operator MGM China Holdings Ltd rose by 9.7 percent sequentially to US$812.5 million in the third quarter. The figure represented a 10-percent increase from the results of the pre-pandemic third quarter in 2019, said a Wednesday filing from parent MGM Resorts International.

In a separate filing to the Hong Kong Stock Exchange, MGM China said its third-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were HKD1.89 billion (US$243.1 million), up 7.9 percent quarter-on-quarter. The firm said in a separate press release that adjusted EBITDA exceeded by 122 percent the third-quarter 2019 results.

Third-quarter group adjusted EBITDA margin however was slightly lower quarter-on-quarter at 29.6 percent, versus 30.1 percent in the April to June 2023 period.

“The group is pleased to see a solid recovery in Macau since the beginning of the year,” stated MGM China in its Thursday release. It said the company “continues to outperform industry recovery and grow from 2019”.

MGM China runs the MGM Macau resort (pictured) on the city’s peninsula, and MGM Cotai in the newer gaming-resort district of Cotai.

MGM China’s third-quarter earnings increased “to record quarterly high, with MGM Cotai at historical record, although MGM Cotai margins were marginally lower,” said analyst Andrew Lee of brokerage Jefferies LLC, in a note on Wednesday.

JP Morgan Securities (Asia Pacific) Ltd stated in a Thursday memo that MGM China’s “strong” quarterly performance had been led by mass share gains. “We couldn’t find anything really negative from the print or the [management conference] call”, except “weak” VIP trends, “which is pretty unimpoortant as the segment drives only 2 percent to 3 percent of the group’s EBITDA”, added analysts DS Kim, Mufan Shi and Selina Li.

On a property basis, MGM Macau generated revenue of HKD2.87 billion for the three months to September 30, up from HKD2.58 billion in the preceding quarter. The property recorded adjusted EBITDA of HKD880.5 million, a 14.2-percent increase from the previous quarter. EBITDA margins increased slightly to 30.6 percent compared to 29.9 percent in second quarter 2023.

MGM Cotai produced revenue of HKD3.48 billion for the third quarter, versus HKD3.23 billion in the second quarter. The complex achieved adjusted EBITDA of HKD1.00 billion, up about 3 percent sequentially.

“It was the first time the property [MGM Cotai] surpassed HKD1 billion, but adjusted EBITDA margin was slightly lower at 28.8 percent, versus 30.2 percent in second quarter 2023,” noted Mr Lee.

MGM China’s press release added that the group “maintained a healthy financial position”. It said as of September 30, it had total liquidity of about HKD18.2 billion, comprised of cash and cash equivalents and undrawn revolver.

The statement quoted Kenneth Feng, president and executive director of MGM China, as saying that the group was “excited about the recovery in Macau, along with the diversification development of the city”.

“We will continue investing in the gaming floor to enhance table yield,” he added. “At the same time, we are committed to bringing in more unique integrated tourism experiences to attract international visitors.”

In its Wednesday memo, Jefferies’ Mr Lee said that the Macau gaming sector “continues to be dragged down by China macro market headwinds”. But MGM China’s management “remains positive, with October [achieving] a record EBITDA month” for the company.

“Macau gaming revenue remains relatively strong with the start of November still above the summer holidays,” he added.