MGM China Holdings reported a 12% increase in gaming revenue in the first half of the year on results from main-floor table games at MGM Macau that significantly outperformed the market.
The casino’s 194 mass-market tables delivered HK$4.87 billion in revenue through the six months ended 30th June, a 42.7% increase over the same period in 2013 — well above the market average of +36.7% — on a 32% increase in drop.
MGM China (HKSE: 2282) attributed the robust performance to a “successful customer segmentation approach” focused on mid- to high-limit play.
“We have continued to invest capital to improve the gaming experience of our high-end main floor customers by creating dedicated exclusive gaming space for their use and reallocating tables from VIP gaming to our main floor gaming areas to maximize our yield and profit,” the company said. “We also leveraged our Golden Lion Club as a vehicle to attract and retain those high-value main floor players through exclusive customer service and promotions.”
A similar segmentation strategy bore fruit on the machine gaming side. Slot handle was up 12.2% year on year and average daily win per unit grew 6.4%. However, revenue was down 2.5% to $1.13 billion on a dip in win percentage of 70 basis points.
For the six months, mass tables and slots combined accounted for more than 44% of total gaming revenue.
Conversely, rolling chip turnover at the 229 VIP tables was essentially flat year on year at +0.5%, principally the result of a market-wide softness in the sector, which operators and analysts blame on slower economic growth in mainland China and the central government’s wide-ranging crackdown on corruption. For MGM Macau it worked out to a 4% increase in VIP revenue, roughly in line with the market’s first-half growth of 3.2%.
The property’s total revenues were up 12.3% to HK$13.72 billion, and in all, the company grew adjusted EBITDA by 16.4% to $3.76 billion, despite an increase of 18.5% in staff costs—an increasing concern across the industry given the city’s straightened labor supply—as the company added new hires during the period and raised salaries for line-level employees by 5%.
Net income was $3.03 billion, equivalent to earnings per diluted share of 79.7 cents—51% of which goes to the company’s Las Vegas-based majority shareholder, MGM Resorts International.
The company also declared an interim dividend of 28 cents per share.
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