Macau casino operator MGM China Holdings Ltd’s leverage metrics remained “healthy” and could show a “slight improvement” within 2025, following an expected marginal recovery in the firm’s earnings before interest, taxation, depreciation, and amortisation (EBITDA) post-completion of ongoing revamp projects at its two properties in the city, suggested CreditSights Inc in a Thursday memo.
The memo was issued following the publishing of the company’s fourth-quarter financial results.
MGM China, a subsidiary of U.S.-based MGM Resorts International, runs casino resorts MGM Macau in the city’s peninsula, and MGM Cotai.
As of December-end, MGM China’s unrestricted cash balance – cash, cash equivalents and short-term investments in debt securities – stood at US$685 million, while its total debt was US$3.0 billion.
“The company’s total debt/LTM [last twelve months] EBITDA and net debt/LTM EBITDA were largely flat at 2.6 times and 2.0 times as of year 2024, respectively,” and “were still lower than pre-pandemic levels … as well as the strongest amongst its HY [high-yield] peers,” stated CreditSights, a division of the Fitch group.
“We expect MGM China’s leverage metrics to improve slightly following the expected marginal recovery in EBITDA,” wrote analysts Nicholas Chen and David Bussey.
They added: “MGM China has a US$500-million, 5.25-percent [senior notes] 2025 coming due in June, which we expect to be manageable.”
For full-year 2024, MGM China’s EBITDA was up 25 percent year-on-year to HKD9.1 billion (circa US$2.1 billion), while its EBITDA margin was down slightly to 28.9 percent from 29.3 percent in 2023.
The casino operator’s EBITDA in 2019 – the immediate trading year before the Covid-19 pandemic – stood at HKD6.2 billion, with an EBITDA margin at 27.2 percent.
“MGM China’s overall gaming win was still dominated by the higher-margin mass segment, growing to 88 percent in fiscal year 2024 (fiscal year 2023: 84 percent),” observed CreditSights.
“Coupled with its ongoing conversion of former VIP junket areas in MGM Macau into villa accommodation units (expected completed by mid-2025) as well as converting circa 160 standard hotel rooms into 60 luxury suites at MGM Cotai (expected to come online by year 2025), we envisage a marginal boost to MGM China’s EBITDA and EBITDA margin in second half of 2025/fiscal year 2026,” said the CreditSights analysts.
