EBITDA forecast reduced for MGM China

Morgan Stanley has cut the EBITDA forecast for the casino company by 12 per cent.

China.- International analyst Morgan Stanley has revealed that the EBITDA forecast for MGM China Holdings Ltd has been cut by 12 per cent. They said that they expect the casino company to report an EBITDA of US$619 million for this year.

The analysts predicted that EBITDA for MGM would increase to US$862 million next year, which falls short of the previous forecast by 17 per cent. “We expect MGM to report Q2 property EBITDA of $142m (13% lower) weakest among peers. While this seems to be reflected in recent stock underperformance, the earnings revision could continue to remain negative in the near term, capping performance.”

Morgan Stanley said that the reduction is due to a slow build up of MGM’s Cotai property, as well as the lack of VIP business and Peninsula casinos cannibalisation. Nevertheless, the firm said that MGM China is set to experience significant growth in the long run once it’s more established.

“We also believe that from Q4, MGM could see an improvement in VIP and premium mass business. With SJM’s opening delayed we expect MGM could continue to ramp well in 2019 with limited competition and 25 additional gaming tables.”

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