MGM China results for the fourth quarter beat the highest expectations and surpassed even 2019 pre-pandemic levels, several analysts and brokerages stated.
The Macau gaming operator experienced a record-breaking year in 2023, witnessing record-high performance across segments and continuing to outperform industry recovery.
According to unaudited financial data, MGM China saw an adjusted EBITDA turnaround from 2022 to a historical high of HK$7.2 billion ($921 million), representing 117 percent of 2019.
AGB checks of JP Morgan, Morgan Stanley, Jefferies, and Deutsche Bank dispatches show that all brokerages considered that MGM China’s results beat their estimates.
JP Morgan pointed out that MGMs fourth-quarter results beat ‘even the highest expectations on the street’ with a record-high EBITDA of HK$2.1 billion and a ‘whopping’ 40 percent above pre-COVID levels.
‘The details were also solid: MGM was (by far) the best share gainer for both mass and VIP, and January seems to be tracking even better than 4Q. Recall, this marks the fourth consecutive quarter of beats, and – to our surprise – the magnitude of beat seems to be getting bigger every quarter!’ JP Morgan’s dispatch noted.
Adjusted property EBITDA grew 16 percent quarter-to-quarter to a record-high HK$2.19 billion ($280 million), 9 percent above consensus of HK$2.0 billion ($255.8 million), and a 141 percent recovery for 2019 results.
Over the curve
Morgan Stanley noted that MGM China’s property results were 10 percent higher than its predictions, with the operator reporting a quarter-to-quarter growth similar to Wynn, but better than Sands.
The brokerage described also that MGM China daily total costs, except tax and rebates, jumped 28 percent quarter-to-quarter to 148 percent in the same quarter in 2019 ‘due to promotion and opex commitments’, while reducing its net debt by 9 percent or HK$2 billion ($255.8 million) quarter-to-quarter.
Deutsche Bank analyst Carlo Santarelli, pointed out that given higher market shares in both Las Vegas and Macau, MGM managed to deliver results better than its estimates, though potentially below the more bullish buyside estimate
Jefferies added that MGM China set another record quarterly earnings that beat consensus, with its market share at a ‘new high’.
Trend continues through Year of the Dragon
‘This trend has continued into 2024 with gaming operations through the Chinese New Year period higher than in 2019 so far. China macro concerns remain a headwind, but sector fundamentals continue to be stronger than estimates,’ Jefferies analysts added.
As for January and this year’s Chinese New Year period between February 10 and 17, Morgan Stanley highlighted MGM’s trend of outperforming 2019 results continued.
The brokerage state that MGM China’s January GGR market share reached 20 percent, compared to 16.3 percent in the last three months of 2023 and 9.5 percent in 2019, depsite holding a table share of 12.5 percent and room share of 7 percent in the city.
MGM China saw volume for all gaming segments above 2019 levels in the first four days of data out of the seven of the CNY holiday period.
