MGM China Rises to 5-Month High on Profit Surge: Hong Kong Mover
MGM China Holdings Ltd. (2282), the Macau venture between Pansy Ho and the biggest casino operator on the Las Vegas Strip, rose to the highest in more than five months in Hong Kong trading after 2011 profit more than doubled.
MGM China jumped 6.6 percent to close at HK$13.82, the highest level since Sept. 9. The benchmark Hang Seng Index fell 0.78 percent.
Net income rose to HK$3.28 billion ($423 million) in the year from HK$1.57 billion in 2010, MGM China said in a stock exchange filing yesterday after the market closed. Casino revenue climbed 65 percent to HK$20 billion as the company joined Sands China Ltd. (1928) and Melco Crown Entertainment Ltd. (6883) in reporting higher earnings fueled by the arrival of tourists in Macau from China. MGM China also said it will pay a special dividend of 81.6 Hong Kong cents per share.
“We are pretty happy about the dividend payout,” Gabriel Chan, an analyst at Credit Suisse Group in Hong Kong, said in a phone interview. “The company has a high level of net cash. It is likely to maintain a high payout policy.”
MGM China relies on its single property, the MGM Grand on the Macau peninsula, even as Sands China and Galaxy Entertainment (27) Group Ltd. benefit from the increasing popularity of the city’s Cotai strip, where they have integrated resorts.
Cotai is gaining popularity and companies that haven’t yet got establishments there may lose market share, Adrian Lowe, an analyst at Mirae Asset Securities in Hong Kong, said before the earnings release.
MGM China has the resources to expand, including by developing a casino-hotel complex in Cotai, it said in the statement. The company has applied to the Macau government to lease land in Cotai, with no timetable for completion, MGM China said.
Credit Suisse’s Chan foresees that the land premium negotiation and land approval process for the group’s Cotai site application will be delayed to next year.
Sands China’s Sands Cotai Central is scheduled to open in six weeks, according to a company conference call on Feb. 2.
Pansy Ho, a daughter of Macau gaming mogul Stanley Ho, teamed up with MGM Resorts International (MGM) to tap the gaming business in Macau, the world’s largest gambling hub and the only place in China where casinos are legal. Casino gambling revenue in the city surged 42 percent to 268 billion patacas ($33.5 billion) in 2011, government data show.
MGM China shares have soared 36 percent in Hong Kong this year, while Sands China has jumped 34 percent and Galaxy Entertainment has gained 33 percent.
Melco Crown, whose co-chairman is Pansy Ho’s brother Lawrence Ho, has gained 33 percent this year. The venture with Australian billionaire James Packer reported a more than sixfold jump in fourth-quarter net income to $107.5 million on Feb. 10, mainly from the City of Dreams casino in Cotai.
MGM China also competes with SJM Holdings Ltd. (880), whose chairman is Stanley Ho, father of both Pansy and Lawrence. SJM has the biggest market share in Macau’s gambling industry, and 20 of the city’s 33 casinos. Wynn Macau Ltd., a unit of Steve Wynn’s Wynn Resorts Ltd. (WYNN), has a single property, on the Macau Peninsula.
Visitors to the former Portuguese colony jumped 12 percent to 28 million last year, with 53 percent from mainland China, according to government data.
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