Macau casino group MGM China reports best-ever June quarter as tourists return, winning odds improve

Publish date: 2024-08-07
Macau casino operator MGM China recorded its best second-quarter performance on record as gamblers and tourists returned to the city, aided by higher winning ratios and a dismantling of pandemic curbs that helped fuel a rebound in tourism.

The firm reported a 40 per cent jump in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) to HK$2.44 billion (US$312.2 million) in the three months to June 30, according to a Hong Kong stock exchange filing on Thursday. It surpassed market estimates by 9 per cent, based on consensus forecasts from analysts tracked by Bloomberg.

While Ebitda dropped slightly from the first quarter, the 31 per cent margin was surprisingly strong, JP Morgan said in a research note after the announcement. Ebitda was about 170 per cent of the pre-Covid levels and more than double what peers were doing, it added.

New York-listed MGM Resorts International owns 56 per cent of the shares in MGM China. Pansy Ho Chiu-king, chairperson of the Hong Kong-listed company, controls about 22.5 per cent of the Macau concessionaire.

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‘What else have we got?”: Macau questions role as casino hub after painful Covid downturn

‘What else have we got?”: Macau questions role as casino hub after painful Covid downturn

Tourism in Macau has continued to mend after China scrapped its tough zero-Covid policy in late 2022. Tourist arrivals surged 44 per cent in the first six months of 2024, reaching about 82 per cent of the pre-pandemic levels. Casino revenues rose 42 per cent to about 114 billion patacas (US$14.1 billion), according to government statistics.

Net revenue at MGM China rose 37 per cent HK$7.96 billion in the June quarter, the company said. The recovery in the group’s two casinos was well above the broader gambling market, which has only returned to around 80 per cent of pre-pandemic levels, said William Hornbuckle, CEO of MGM Resorts.

MGM China said its win percentage from main-floor tables in Macau rose to 20.6 per cent from 20.1 per cent, while the odds on VIP tables rose to 3.4 per cent from 2.8 per cent. In Cotai, winnings rose to 28.1 per cent from 23.1 per cent at main-floor tables, but the odds fell to 2.5 per cent from 3.7 per cent on VIP tables, according to the filing.

MGM China said it has a 16 per cent share of the casino market in Macau, a slight drop from 17 per cent in the previous quarter. There is still room for growth in the market and for MGM to steal additional share from other players, he added.

MGM Resorts posted a 9.8 per cent rise in net revenue for the second quarter, riding on the business improvements in Macau. Hornbuckle expects a “growing dividend” from MGM China, which will report its full financial results on August 8. Rival Sands China last week reported a 32 per cent jump in net profit to US$246 million in the second quarter from a year earlier.

He also confirmed that the group is interested in a new integrated casino resort opportunity in Thailand, adding that any such investment would be made through MGM China.

“While any Thai investment discussion is in its nascent stage, we believe any such investment may cause investor concerns on execution and a cap on MGM China’s dividend upside,” BofA Securities said in a report. However, it may provide a hedge if Thailand ends up stealing gross gaming revenue share from Macau, it added.

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