MGM stock drops on Cotai delay

MGM China stock dropped more than 7 percent in Hong Kong trading on Thursday after the company announced a further delay to the opening of its new IR on Cotai.

The HK$27 billion ($3.4 billion) property had been scheduled to launch on Monday. The company said it was still in the process of obtaining relevant licenses and that it now expects to open in February. It didn’t give an exact date, though analysts say they are hoping the resort manages to open its doors before the crucial Chinese New Year period, which falls on Feb. 16th this year.

“We are working closely with the Macau government to bring to our community and to the public a long-awaited world class resort that takes diversified consumer experiences to a new height and that thousands of our employees feel deeply proud of,” the company said in a statement.

MGM confirmed that cost of the resort has come in within its budget.

The opening of the resort has already been delayed several times, moving from the fourth quarter of 2017 to January this year due to the impact of Typhoon Hato on construction.

Earlier this week, the government announced that MGM will be allocated 100 tables when it opens and is able to add a further 25 on its first year anniversary. The allocation is lower than that given to recent resort openings, such as the Wynn Palace and Sands China’s The Parisian.

“The lower table allocation could be somewhat helpful to Wynn (both Palace and Peninsula) as well as City of Dreams, as both MGM properties will have a lighter than anticipated table inventory,” Bernstein said in a research note. “If MGM Macau is able to move more tables to Cotai, the shift may leave MGM Macau vulnerable to both Wynn Macau and Galaxy’s Starworld (and more impacted by cannibalization), who will cater to MGM’s premium peninsula customers.”

Bernstein adds that the government has reportedly only permitted MGM to move 77 tables from its existing property, which may further affect the ramp up.

 

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