GGRAsia – MGM Resorts CFO says Macau margins, share to be steady

MGM Resorts CFO says Macau margins, share to be steady

Sep 25, 2024 Newsdesk Japan, Latest News, Macau, Top of the deck

Macau casino operator MGM China Holdings Ltd will in likelihood maintain its gross gaming revenue (GGR) share in the Macau market “in the mid-teens,” and its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) margin “in the high twenties”.

So said Jonathan Halkyard (pictured in a file photo), chief financial officer (CFO) of its United States-based majority shareholder, MGM Resorts International. He was speaking on Tuesday at Deutsche Bank’s 32nd Annual Leveraged Finance Conference.

“Right now, our businesses in Macau are performing at a very high level,” stated Mr Halkyard.

MGM China runs the MGM Macau property on the city’s peninsula, and MGM Cotai in the newer casino district of Cotai.

“Despite the fact that we only have about 12.5 percent of the [gaming] tables in the market and under 10 percent of the suites in that market, these businesses have pretty consistently delivered market share in the mid-teens,” he added.

“We expect to see that to continue and [EBITDA] margins in the high twenties, and that’s without the benefit of some of the high-end retail that some of our competitors have,” remarked the CFO.

He added: “So, I think our market share in the mid-teens, and [EBITDA] margins in the high twenties will continue.”

MGM China said in August that its first-half adjusted EBITDA margin had reached a “record high” of 30.5 percent, compared to 29.7 percent for same period in 2023, and 27.2 percent in 2019.

The company stated that its market share of GGR in Macau “further climbed to 16.5 percent” for the six-month period, from 14.9 percent a year ago and 9.5 percent in 2019.

As competition among Macau operators is increasing, especially for customers in the premium-mass segment, companies have been spending more in promotional and reinvestment activity, according to industry commentators.

In his Tuesday comments, Mr Halkyard said the company had “not seen any real uptick in promotional activities” in Macau, “nor have we engaged in other than what I consider to be some pretty smart moves by our local management team there to introduce offers and products that our customers really like that are not particularly expensive but keep them visiting us”.

The executive also gave some remarks on the company’s plan for a casino resort in Osaka, Japan, due to open in 2030.

“We are going to officially break ground next May, but the work has already begun on the site for various site,” stated the CFO.

He said that the Expo 2025 – also on Yumeshima island in Osaka – was important for the MGM Osaka project “because it provides some of the infrastructure that will be important for our integrated resort, in terms of transportation and site improvements”.

MGM Osaka is a JPY1.27-trillion (US$8.70-billion currently) project between MGM Resorts and Japan’s Orix Corp, plus a number of minority local investors.

Mr Halkyard said the group completed a JPY530-billion bank financing back in March, at a “very attractive price”.

He stated: “Our equity investments have already begun with almost US$200 million this year. And over the course of the next four-and-a-half years, we’ll be investing just over US$2 billion into the project, together with our partners, Orix and minority investors.”

“Then, we’ll begin to draw on the credit facility, and that’ll be in 2028, 20 29, through the completion of the project and opening in 2030,” the executive added.