MGM China 4Q EBITDA positive, rev up 550pct sequentially

MGM China 4Q EBITDA positive, rev up 550pct sequentially

Macau casino operator MGM China Holdings Ltd reported adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD367.2 million (US$47.4 million) for fourth-quarter 2020, after three quarters of losses. The Hong Kong-listed company had reported negative third-quarter adjusted property EBITDA to the tune of HKD730.6 million.

MGM China runs two casino resorts in Macau: MGM Macau (pictured) on the city’s peninsula, and MGM Cotai, in Macau’s Cotai district.

In a Thursday press release, the casino firm said its two properties recorded positive EBITDA for the final quarter of 2020. MGM Macau and MGM Cotai reported respectively adjusted EBITDA of HKD247.1 million and HKD120.1 million.

The aggregate quarterly EBITDA result was nonetheless a decline of 76.4 percent from the HKD1.56 billion recorded in the fourth quarter of 2019.

Andrew Lee, an analyst at Jefferies Group LLC, said in a note that the quarterly EBITDA result at MGM China’s two properties “beat our estimates due to lower costs,” with group adjusted EBITDA margin rebounding to 16 percent.

MGM China said revenue for the final three months of 2020 grew by 550 percent quarter-on-quarter, to approximately HKD2.36 billion, supported by an increase in gaming revenue in the mass-market gaming segment. Such quarterly revenue was down 58.5 percent from the prior-year period.

In Thursday’s release, MGM China said its business “has been picking up since October Golden Week,” as the company “saw improving volume across all operations from the third quarter.” Overall hotel occupancy stood at 57.3 percent in the fourth quarter, stated the firm.

The release quoted Hubert Wang, MGM China’s president and chief operating officer, as saying: “We are pleased to see MGM China turned profitable again driven by strong market share gains and continued cost mitigation efforts.”

“We expect the broader rate of business recovery will continue to be gradual, driven by the premium mass market which both MGM Macau and MGM Cotai are well positioned to capture,” he added.

Growing market share

MGM China said the group’s share of the Macau gaming market had “reached 12.6 percent” in the three months to December 31, as its “business outperformed the market.”

In the fourth quarter, MGM China posted HKD8.15 billion main-floor table game drop, up from just HKD1.11 billion in the previous quarter. A year earlier MGM China had posted nearly HKD16.47 billion in mass-market table game drop.

Revenue from the mass-market segment stood at HKD1.89 billion in the final quarter of 2020, up from just about HKD192 million in the preceding quarter, but halved from the HKD3.95 billion achieved in the prior-year period.

Volume in MGM China’s VIP table game segment improved sequentially in the fourth quarter, with the firm posting a quarterly rolling chip volume of HKD17.14 billion, more than twice as much as the HKD7.19 billion VIP turnover in the third quarter. It was still a sharp dip from the HKD66.2 billion recorded a year earlier.

Revenue in the VIP segment stood at HKD580.4 million, an improvement on the HKD134.4 million recorded in the third quarter, but down from nearly HKD2.25 billion in the prior-year period.

For full-year 2020, MGM China posted revenue of nearly HKD5.10 billion, down from HKD22.77 billion in 2019. The company reported an adjusted EBITDA loss of HKD1.37 billion, versus a positive result of HKD6.18 billion in the previous year.

MGM China’s parent group, U.S.-based casino operator MGM Resorts International, reported overall adjusted property earnings before interest, taxation, depreciation and rent or restructuring (EBITDAR) of nearly US$97.4 million in the fourth quarter. MGM Resorts reported consolidated net revenues of US$1.5 billion for the fourth quarter, down 53 percent from a year earlier.

For full-year 2020, MGM Resorts reported consolidated revenues of US$5.2 billion, down 60 percent year-on-year; and a net loss of US$1.0 billion, compared to net income US$2.0 billion in the prior-year quarter, which included a one-off US$2.7 billion gain.

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