MGM China’s mass market share to rise by 3% in 2024, analysts say
According to Morgan Stanley, MGM China Holdings’ mass market share will rise due to the addition of gaming tables.
Macau.- Morgan Stanley has predicted that MGM China Holdings‘ mass market share will rise by at least 3 per cent next year, mainly due to the addition of gaming tables. MGM China had 553 gaming tables at the end of 2019, which increased by 35.6 per cent to 750 under its new concession.
The addition of new gaming tables has already taken MGM’s market share from 8.2 per cent to 12.5 per cent, according to analysts Praveen K Choudhary and Gareth Leung. They believe that MGM China’s share of the mass market will rise from 10 per cent in 2019 to 13 per cent in 2024.
They say MGM China’s mass market share rose consistently during the Covid-19 pandemic while other operators’ shares declined. However, MGM China and other gaming operators have high gearing ratios, with net debt to 2019 EBITDA of 4.6x and 4.4x, respectively.
At the end of last year, MGM China had US$860m (MOP6,940m) in cash, while Melco Resorts & Entertainment had US$1.8bn. MGM China’s earliest bond maturing is US$750m in May 2024, while Melco’s is US$1.5bn in June or July 2025.
Analysts believe that MGM China should have liquidity support from its US-based parent company, MGM Resorts. Meanwhile, Melco will spend around US$300m on development or maintenance capital expenditures this year.
For full-year 2022, MGM China reported HK$5.3bn (US$674m) in net revenues. That represents a decline of 44 per cent compared to the prior year. It recorded a negative adjusted EBITDA of HK$1.3bn (US$203m), compared to HK$187m (US$25m) in 2021.