MGM China to spend US$172mln on special dividend

Aug 29, 2024 Newsdesk Latest News, Macau, Top of the deck  

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The board of Macau-based casino operator MGM China Holdings Ltd has declared the payment of a special dividend of HKD0.353 per share to the company’s shareholders.

The Hong Kong-listed company said in a filing on Thursday it expected to spend just above HKD1.34 billion (US$172.0 million) on the dividend, which it anticipates will be paid on October 4.

“The board has resolved to declare the special dividend after further consideration of the group’s latest general financial position, existing cash flow, capital requirements going forward and other factors that the board considered relevant,” stated the firm.

MGM China said its board determined the group had “sufficient resources, after the payment of the special dividend, to finance its operations, development of its business, and investment commitments” made to the Macau government under its new gaming concession that started on January 1, 2023.

“The special dividend should not be taken as an indication of the level of profit or dividend going forward,” it added.

A Thursday note from JP Morgan Securities (Asia Pacific) Ltd said that “if annualised” the dividend payout “implies a 6.8 percent dividend yield this year,” which would be “by far the highest level in Macau, and also the highest globally among all the listed casino companies under our coverage”.

Analysts DS Kim, Mufan Shi and Selina Li also observed: “Recall, only three [Macau] operators are paying dividends this year – MGM [China], Galaxy [Entertainment Group Ltd], and Wynn [Macau Ltd]; and we expect Sands China [Ltd] to resume dividends next year, likely in the second half with its interim results.”

On August 15, in its interim results, Galaxy Entertainment announced an interim dividend of HKD0.50 per share, payable on October 25. The same day, Wynn Macau Ltd declared an interim dividend of HKD0.075 per share.

MGM China operates two properties in the Macau market: MGM Macau (pictured) on the city’s peninsula; and MGM Cotai in the Cotai district.

Second-quarter revenue at MGM China rose 37.0 percent year-on-year, to HKD7.96 billion. Such revenue however was down 3.6 percent sequentially.

The main beneficiary in aggregate cash terms of the special dividend payment by MGM China will be its majority owner, U.S.-based MGM Resorts International. The latter controls about 56 percent of MGM China’s issued share capital.

MGM China resumed the payment of dividends earlier this year, following years during which its business was negatively affected by the Covid-19 pandemic.

The company paid in June a final dividend for 2023 of HKD0.243 per share. The company also declared a special dividend of HKD 0.104 per share, paid in April.

The two dividends combined represented 50 percent of the 2023 profit attributable to the owners of the firm, said MGM China.

MGM China’s 2023 total revenue grew to HKD24.68 billion, an increase of 368.5 percent from the prior year, and 108.4 percent of pre-pandemic trading year of 2019.

(Updated Aug 30, 10.15am)

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