MGM China Profit Gains on Mass-Market GamblersVinicy Chan
MGM China Holdings Ltd., the Macau casino operator, said first-quarter profit jumped by a third as mass-market gambling increased.
Adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, increased to $257 million from $193 million a year earlier, according to a statement yesterday from MGM Resorts International, the company’s Las Vegas-based parent. That compares with the median estimate of $258.5 million from six analysts surveyed by Bloomberg News. The numbers exclude a branding fee of $16 million this year and $13 million last year.
MGM China will continue to redeploy more gaming tables to mass-market gamblers, Chief Executive Officer Grant Bowie said on a conference call after the results were announced. The company’s mass-market revenue grew 45 percent in the quarter, outperforming Macau’s market growth of 40 percent, he said.
“The mass market is now getting to that point where it’s anchoring most of the operator’s Ebitda performance,” Bowie said on the call.
Revenue at MGM China climbed 26 percent to $941 million. Sales at the operator’s VIP-room gambling tables rose 12 percent, MGM said.
“MGM has grown more resilient” against a slowdown in VIP gaming revenue, Simon Cheung, a Hong Kong-based analyst at Goldman Sachs Group Inc., wrote in a note today, citing the company’s focus on the faster-growing, higher-margin mass-market segment.
Shares of MGM China were unchanged at HK$27, after rising as much as 5.2 percent earlier. The city’s benchmark Hang Seng Index dropped 1.4 percent.
MGM has one casino in Macau and is building a second in the city’s Cotai area, set to open in early 2016. The $2.9 billion MGM Cotai will “greatly” expand the company’s local operations as it will have almost three times as many rooms as the MGM Macau casino now has, Bowie said on the call.
High-stakes gamblers, or VIP bettors, typically wager more than $1 million on baccarat per visit to Macau and bet on credits arranged by junket operators.
Total gambling revenue in Macau, the only place in China where casinos are legal, rose 20 percent to 102.2 billion patacas ($12.8 billion) in the first three months of this year.
Macau casino mogul Stanley Ho’s daughter Pansy Ho holds a 27 percent stake in MGM China.