Scientific Game

MGM China 2018 EBITDA to grow faster than peers

Wednesday, 29 November 2017 05:59
Visit us

Financial services firm Morgan Stanley believes MGM China will enjoy the strongest EBITDA growth of any of Macau’s six gaming concessionaires in 2018, driven by a stronger than expected performance at its new MGM Cotai IR, due to open on 29 January.

In a Wednesday note, Morgan Stanley analysts outlined their reasons for holding a bullish view on MGM China which they say will likely follow the lead of Wynn’s 82% year-on-year EBITDA growth within the first 12 months of Wynn Palace’s launch. Moreover, they point to a number of key advantages MGM Cotai holds over Wynn Palace including better location and a smaller base.

“We estimate [MGM] could see >80% EBITDA growth between 2017 and 2019, implying 35% CAGR over 2017-19 – much stronger than peers of 11%,” said analysts Praveen Choudhary, Alex Poon and Thomas Allen.

“We are confident in this growth rate because … MGM China has the smallest base compared to peers, with only 582 hotel rooms and 427 gaming tables; Wynn Macau 3Q17 property EBITDA grew 82% year-on-year after the opening of Wynn Palace in August 2016 … MGM Cotai will have the same junkets as Wynn Palace does, and MGM Cotai's location is better than Wynn Palace with less obstruction from Light Rail construction and it's closer to City of Dreams.”

Morgan Stanley added that expectations of a small 3% market share gain for MGM China following its Cotai launch seems undervalued given Wynn Palace contributed a 4% to 5% gain for Wynn in its first year.

“Our MGM Cotai EBITDA estimate of US$421mn in 2019 is 15% above consensus. We see higher upside to MGM's dividend (up 5x) and thus stock re-rating to 5-6% FCFE yield by 2019-20,” it said.


What's new

Paradise Entertainment buys 33,000 square feet of Macau warehouse space

Paradise Entertainment buys 33,000 square feet of Macau warehouse space Macau-based casino operator and electronic gaming machine manufacturer Paradise Entertainment Limited has entered into an agreement to purchase six units of warehouse space on the Macau Peninsula for a total consideration of HK$128.5 million. In a filing to the Hong Kong Stock Exchange, the company... Tuesday, 19 June 2018 21:17

Hainan casino operations to be met with “harsh reaction” from authorities

Hainan casino operations to be met with “harsh reaction” from authorities Any attempts by resorts on the Chinese holiday island of Hainan to launch gambling operations would be met by an “immediate and harsh reaction from authorities” – quashing any theoretical impact on Macau’s casinos. So says Union Gaming’s Head of Equity Asia Research, Grant Govertsen, in r... Tuesday, 19 June 2018 20:11

Japan’s lower house passes IR Implementation Bill

Japan’s lower house passes IR Implementation Bill Japan’s casino legislation has taken a giant step forward after the lower house officially passed the IR Implementation Bill on Tuesday, paving the way for the nation’s first integrated resorts. The bill will now head to the upper house where the ruling Liberal Democratic Party will try to pass... Tuesday, 19 June 2018 16:43

Industry shocked at sudden death of Foxwoods boss Felix Rappaport

Industry shocked at sudden death of Foxwoods boss Felix Rappaport The gaming industry is in shock this morning following the sudden passing of Foxwoods Resort Casino’s President and CEO Felix Rappaport. Foxwoods and its owners, the Mashantucket Pequot Tribal Nation (MPTN), announced Rappaport’s sudden loss overnight, stating that the cause of death has not ye... Tuesday, 19 June 2018 07:05

Current Issue

Tribal Ambition

Tribal Ambition By Muhammad Cohen and Ben Blaschke   Mohegan Gaming and Entertainment CEO Mario Kontomerkos believes the Native American casino operator has two aces in the hole for Japan, especially when it comes to the so-called regional markets beyond major areas. In his presentation at last month’s Japan ... Monday, 04 June 2018 20:55

Social Gathering

Social Gathering By Shaun McCamley   Social casino gaming is booming. In 2017, the global social gaming industry generated a whopping US$106 billion in revenues, with the social casino segment generating US$4.5 billion in revenues. Not surprisingly China, Japan and Korea generated 90% of the games revenue in the... Monday, 04 June 2018 20:44

Redefining Tourism

Redefining Tourism By Muhammad Cohen   In an era when tourism constitutes a growing portion of the global economy, integrated resorts present a potent although frequently misunderstood means for growing visitor arrivals and revenue. It’s not simply the casino but their range of attractions that make IRs such powe... Monday, 04 June 2018 20:37

Japan IR Timeline

Japan IR Timeline By Ben Blaschke   What year for Japan’s first IR? It’s a question that continues to divide industry stakeholders, the answer further clouded by the substantial disparity in opinion offered at last month’s Japan Gaming Congress (JgC) in Tokyo. At the nearer end of the scale, members of the... Monday, 04 June 2018 20:27