MGM China 3Q Net Profit Up 10pct q-o-q, USD 813M

Macao casino operator MGM China Holdings Ltd’s quarterly net profit rose 9.7% for the third quarter in a row to $812.5 million. The figure represents a 10% increase from results in the pre-pandemic third quarter of 2019, according to a filing Wednesday by parent company MGM Resorts International.

MGM China said in a separate filing with the Hong Kong Stock Exchange that adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) rose 7.9% quarter-on-quarter to HK$1.89 billion ($243.1 million). In a separate press release, the company said adjusted EBITDA exceeded Q3 2019 results by 122%.

However, Q3 Group Adjusted EBITDA margin was 29.6% quarter-on-quarter, slightly lower than 30.1% April-June 2023.

“The group is pleased to see a solid recovery in Macau since the beginning of the year,” MGM China said in a release on Thursday. “It continues to outperform the industry recovery and has been growing since 2019,” MGM China said.

MGM China operates MGM Macau Resort (pictured) on the city’s peninsula, while MGM Cotai operates in Cotai, a new gaming resort area.

On Wednesday, brokerage Jefferies LLC analyst Andrew Lee said MGM China’s third-quarter earnings, along with MGM Kotai, “reached a quarter high,” although MGM Kotai margins were slightly lower.

JPMorgan Securities (Asia Pacific) said in a note Thursday that MGM China’s “strong” quarterly results were driven by heavy stock gains. Analysts DS Kim, Mufan Shi and Selina Li couldn’t really find anything negative in print or on the [management meeting] call, except for the VIP trend, which “is quite insignificant as the segment is only 2% to 3% of the group EBITDA.”

Based on real estate, MGM Macau posted revenue of HK$2.87 billion in the three months ended September 30, up from HK$2.58 billion in the prior quarter. Real estate posted adjusted EBITDA of HK$880.5 million, up 14.2% from the prior quarter. EBITDA margin slightly increased to 30.6% compared to 29.9% in the second quarter of 2023.

MGM Kotai posted revenue of HK$3.48 billion for the third quarter, compared to HK$3.23 billion for the second quarter. The complex sequentially achieved adjusted EBITDA of HK$1 billion, up about 3%.

“It was the first time that real estate [MGM Kotai] exceeded HK$1 billion, but adjusted EBITDA margin was 28.8%, slightly lower than 30.2% in the second quarter of 2023,” Lee noted.

MGM China’s press release added that the group “remained in a healthy financial position.” MGM China said total liquidity, consisting of cash and cash equivalents and undrawn revolvers, was around HK$18.2 billion as of Sept. 30.

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