Macau casino operator MGM China Holdings Ltd saw its fourth-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fall 75.8 percent, to HKD89.0 million (US$11.4 million), from HKD367.2 million in the same period of 2020. The result was down 11.4 percent from the third quarter of 2021.
Analysts said bad debt was a factor in MGM China’s quarterly EBITDA performance.
But judged year-on-year for the whole of 2021, MGM China’s adjusted EBITDA turned positive, at HKD389.9 million, versus a negative HKD1.37 billion in full-year 2020, the firm said in a Hong Kong filing on Thursday.
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.
MGM Macau achieved adjusted EBITDA of nearly HKD95.5 million in the three months to December 31, and MGM Cotai reported negative adjusted EBITDA to the tune of HKD6.4 million. For the full-year, MGM Macau posted adjusted EBITDA of HKD563.6 million, while the Cotai property had a negative result of HKD173.7 million.
MGM China’s fourth-quarter net revenue was HKD2.45 billion, up 3.8 percent on the same quarter in 2020. The firm’s full-year net revenue rose 84.7 percent year-on-year, to HKD9.41 billion.
MGM China’s fourth-quarter had been “distorted by bad debt,” said a note from brokerage Jefferies Group LLC.
“Stripping out a US$13-million increase in bad debt, earnings would be higher than both our and consensus forecasts, with group revenue 10 percent higher than our estimates,” said analyst Andrew Lee.
JP Morgan Securities (Asia Pacific) Ltd said in a Thursday note that MGM China’s fourth-quarter EBITDA had been “dragged down” by “sizeable bad debt costs,” of circa HKD90 million, “due to junket closure”.
Kenneth Feng Xiaofeng, MGM China’s president, strategic and chief financial officer, was quoted in an accompanying press release issued on Thursday as saying: “We remain cautiously optimistic towards a market recovery. We are going to see not just repeat customers, but new faces especially in the premium mass segment.”
Mass-market table games drop – money exchanged for chips – at MGM Macau, was HKD5.31 billion in the fourth quarter, up 20.1 percent year-on-year. Such full-year drop was HKD20.30 billion, up 127.9 percent on 2020.
VIP table games turnover at MGM Macau was down 17.1 percent year-on-year in the fourth quarter, at HKD8.07 billion. For full year, such turnover was up 27.5 percent, at HKD41.08 billion.
At MGM Cotai, fourth-quarter mass-market drop was HKD3.76 billion, up 0.9 percent year-on-year. Such full-year drop rose 114.0 percent year-on-year, to HKD14.75 billion.
VIP table games turnover at MGM Cotai was down 26.3 percent year-on-year in the fourth quarter, at HKD5.46 billion. For full year, such turnover was up 12.6 percent, at HKD24.98 billion.
The parent, MGM Resorts, reported net income of US$1.25 billion for full year 2021, compared to a US$1.03-billion loss in 2020.
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Analysts at Morgan Stanley