Macau gaming operators MGM and Wynn have surprisingly announced the resumption of dividends for the first time since COVID-19, which bodes well for meaningful and sustainable cash returns in the coming year, as profit flow-through accelerates from continued demand recovery, says JP Morgan.
In the latest investment memo, JP Morgan notes that Wynn Macau and MGM China’s dividend resumptions are the first time since COVID-19, a year earlier than what the Street had expected.
This means that three out of six operators are now paying dividends, including Galaxy, which was the first Macau gaming operator to announce dividends after Macau’s reopening in 2023.
The analysts expect Sands to follow suit next year, while Melco and SJM may prioritize deleveraging for some time. JP Morgan estimates that Sands’s FY24 dividend will be paid in the Calendar Year of 2025.
MGM China Holdings Ltd announced on Thursday a special dividend of HK$0.104 per share for the fiscal year 2023. MGM China recorded a profit attributable to the owners of the company amounting to HK$2.64 billion ($337.4 million), marking a reversal from the HK$5.23 billion ($669 million) loss reported a year earlier.
MGM China’s Special Dividend totaled an aggregate of HK$395.2 million ($50.5 million), equivalent to 15 percent of the group’s profit.
Following MGM’s move, Wynn Macau disclosed that its Board of Directors has recommended a final dividend for FY23.
The proposed final dividend of HK$0.075, which is subject to shareholder approval, coincides with Wynn Macau reporting a profit of HK$1.17 billion ($150 million) for the year. This marks a reversal from a loss of HK$7.35 billion ($940 million) in 2022.
The company further stated that this turnaround was supported by operating revenues of HK$24.3 billion ($3.11 billion), inclusive of casino revenues totaling HK$19.1 billion ($2.44 billion), and an Adjusted EBITDA of HK$6.62 billion ($846 million).
JP Morgan also expects that the resuming dividend payment will be one of those catalysts that could help attract a wider base of investors and normalize the valuation.
