Deutsche Bank lowers MGM China 2024 EBITDAR forecast

Deutsche Bank has lowered its 2024 EBITDAR forecast by 4 per cent.

Macau.- Deutsche Bank has adjusted its 2024 EBITDAR forecast for MGM China making a 4 per cent reduction compared to their previous estimate. The revision comes in response to the perceived deceleration in the market’s recovery.

Deutsche Bank issued an investment memorandum ahead of MGM Resorts’ third-quarter earnings announcement, scheduled for November 8. The bank’s analysts anticipate a “modest margin improvement” for the quarter.

For the second quarter of 2023, MGM China posted a net revenue of US$741m, up 4.9 per cent when compared to the second quarter of 2019 and up 20 per cent in quarter-on-quarter terms. The casino operator reported positive adjusted EBITDA of HK$1.75bn (US$223.9m), up 19.8 per cent compared to the second quarter of 2019 and 24.1 per cent from the preceding quarter.

MGM’s management has outlined four key priorities to sustain market share gains: activating an additional 200 tables, renovating the casino floor, introducing more mass and premium mass-focused tables and implementing direct marketing strategies.

According to Deutsche Bank, MGM China’s profit margins are anticipated to expand gradually on a quarter-to-quarter basis due to an increased proportion of mass revenue across the market. The bank’s report highlighted that during the second quarter of 2023, MGM China may have benefited from a higher-than-average VIP hold, resulting in an estimated EBITDA benefit of US$3-4m.