Macau gaming operator MGM China has announced a special dividend payment of HK$0.353 per share to its shareholders.
In a filing on Thursday, the Hong Kong-listed company disclosed plans to allocate just over HK$1.34 billion ($172 million) for this dividend, with the payment scheduled for October 4th.
MGM China stated that the board decided to declare the special dividend after considering the group’s latest financial position, existing cash flow, future capital requirements, and other relevant factors.
The company also noted that, even after paying the special dividend, it has ‘sufficient resources to support its operations and business development’, as well as to ‘fulfill its investment commitments’ to the Macau government under the gaming concession.
Analysts from JP Morgan pointed out that the special dividend represents a 50 percent payout, consistent with last year’s distribution.
If annualized, this 50 percent payout implies a 6.8 percent dividend yield for FY24E, which is the highest in Macau and the highest globally among all the listed casino companies covered by JP Morgan.
Currently, only three operators are paying dividends this year: MGM, Galaxy, and Wynn. JP Morgan expects Sands China to resume dividends next year, likely in the second half with its interim results.
Additionally, Morgan Stanley believes the declaration of the special dividend will support MGM China’s stock.
‘Macau gaming stocks have underperformed the Hang Seng Index by 33 percentage points year-to-date, despite trading at 9-17 percent FCFE yield,’ Morgan Stanley noted.
‘This underperformance may be due to slower GGR growth momentum, potential regulatory clampdowns, and the high FCFE yield not translating into dividends.’
