MGM China Holdings Ltd., the Macau casino unit of MGM Resorts International, posted a 9.7 percent rise in first-quarter profit as mainland visitors spent more. The stock rose.
Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, increased to $180.5 million from $164.5 million a year earlier, according to the U.S.-based parent’s filing on PR Newswire yesterday. Net revenue at MGM China for the quarter ended in March rose 6 percent to $748 million, MGM International said.
New attractions coupled with an improved rail connection with Northern China are drawing more mainland visitors to Macau, the world’s biggest gambling hub. MGM China broke ground on Feb. 27 on its first resort on Cotai, a piece of reclaimed land in Macau envisioned as Asia’s equivalent of the Las Vegas strip.
The stock jumped 3.4 percent to HK$18.50 at the noon break in Hong Kong trading. The benchmark Hang Seng Index gained 0.7 percent. Pansy Ho, the daughter of casino mogul Stanley Ho, has a 27 percent stake in MGM China.
MGM China has only one casino in Macau and faces rising competition as bigger rivals including Sands China Ltd., Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd. expand on Cotai.
MGM continues to outperform peers on Macau’s peninsula even as it faces competition from Cotai casinos, George Choi, a Hong Kong-based analyst at Citigroup Inc. said in a research note today.
Macau, the only place in China where casino gambling is legal, raked in $38 billion revenue last year, six times that of the Las Vegas strip. Deutsche Bank AG estimated casino revenue will rise 17 percent to $44.5 billion this year.
Turnover at MGM China’s VIP-room gambling tables rose 15 percent from a year earlier, volumes increased 26 percent for main-floor tables and 19 percent for slot machines, MGM said in the filing. The unit had operating income of $99 million compared with $68 million a year earlier, it said.