MGM China saw its net revenues grow 25% year-on-year to HK$4.7 billion (US$596 million) in 1Q18, boosted by the opening of MGM Cotai and a 7.5% increase in revenue at MGM Macau.
MGM Cotai, which opened its doors to the public on 13 February 2018, contributed HK$666.7 million (US$85 million) in net revenues of which HK$491.9 million was mass table games win. VIP turnover at MGM Cotai was HK$2.0 billion with a low win rate of 1.92% seeing VIP win of HK$38.7 million.
Both VIP and mass turnover increased at peninsula property MGM Macau, with VIP turnover up 23.6% for win of HK$2.6 billion. Mass table drop grew 10.3% to HK$10.8 billion although win declined 3% year-on-year to just under HK$2.1 billion due to a low win rate.
Despite the slow ramp-up of MGM Cotai, analysts generally declared MGM China’s results better than expected with limited cannibalization of MGM Macau following the company’s Cotai launch and solid mass performance.
“While MGM Macau’s mass GGR fell 9% quarter-on-quarter given weaker hold, its mass drop remained flattish despite a ~10% decline in mass tables, in turn suggesting the cannibalization from Cotai opening has been limited,” said JP Morgan’s DS Kim and Sean Zhuang.
“The VIP segment showed a similar trend (rolling -2% quarter-on-quarter versus the industry average of +4%), although this was probably due to the fact that Cotai currently has only direct VIP (no junkets).”
Kim and Zhuang noted that MGM Cotai’s daily mass GGR was in line with Wynn Palace’s opening numbers and 10% higher than Studio City. Mass table yield of US$8,200 per day was even better, comparing favorably to US$6,000 per day at The Parisian and US$5,000 per day at Wynn Palace when they launched in 2016.
Morgan Stanley’s Praveen Choudhary, Jeremy An and Thomas Allen are predicting a much stronger second half of the year once junket operations begin, stating, “MGM remains the most compelling stock in our coverage, with the highest projected EBITDA growth, at 36%, for 2H18.”
MGM China CEO and Executive Director Grant Bowie said, “We are delighted to see another set of strong results of MGM Macau, demonstrating continuous customer loyalty to quality product and uncompromised focus on impeccable execution.
“The opening of MGM Cotai represents a milestone. The beautiful property is totally unique and a real game changer for us as well as the market. We look forward to expanding and enhancing our offerings to provide spectacular experience for our guests, supporting our government’s vision to drive global tourism demand in Macau.”
