MGM China Profit Rises on Stronger VIP Contribution
MGM China Holdings Ltd. (2282), the Macau casino operator controlled by MGM Resorts International (MGM), said its second-quarter profit rose 11 percent as high-stake gamblers bet more in the world’s largest gaming hub.
Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, increased to $220 million from $199 million a year earlier, according to the U.S.- based parent’s filing yesterday. That compares with the median estimate of $218.5 million from eight analysts surveyed by Bloomberg News.
Net revenue at MGM China for the quarter ended in June climbed 18 percent to $835 million, mainly because of VIP revenue and main-floor table games, according to the parent’s filing. Casino mogul Stanley Ho’s daughter Pansy Ho, holds a 27 percent stake in the company.
The company has only one Macau casino on the peninsula and is now building its second resort on Cotai Strip, Asia’s equivalent of Las Vegas Strip, as it faces rising competition from bigger rivals.
Sands China Ltd. (1928), Galaxy Entertainment Group Ltd. (27) and Melco Crown Entertainment Ltd. (6883) are adding new attractions to their casino resorts in Cotai to lure mainland Chinese gamblers, who make up the bulk of bettors in Macau.
“Despite fierce competition from Cotai, MGM China was the only market share winner in Peninsula during the second quarter,” George Choi, a Hong Kong-based analyst at Citigroup Inc., wrote in an research note before the earnings announcement. “We continue to rank MGM China as our most preferred Peninsula casino operator, ahead of SJM and Wynn Macau,” he added.
Shares of MGM China dropped 0.4 percent to close at HK$22.90 in Hong Kong trading yesterday, before the earnings. The stock has risen 63 percent this year, beating the benchmark Hang Seng Index’s 3 percent decline.
Turnover at MGM China’s VIP-room gambling tables rose 34 percent from a year earlier, and wins increased 29 percent for main-floor tables and 4 percent for slot machines, MGM said in the filing.
Macau’s gross revenue from VIP baccarat rose to 58 billion patacas in the second quarter from 57.8 billion patacas in the previous quarter, data from the city’s gaming regulator showed. High rollers generate two-thirds of Macau’s casino revenue.
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