MGM profit in Macau misses market target
Bloomberg in Hong Kong
MGM China, a Macau casino operator, reported third-quarter profit that missed analyst estimates amid rising competition in the world's largest gambling market.
Adjusted earnings before interest, taxes, depreciation and amortisation, excluding a branding licence fee, rose 26 per cent to US$198.8 million from US$157.5 million a year ago, according to a filing on Thursday from MGM Resorts International, the US-based parent.
That lagged the average estimate of US$202 million of nine analysts.
MGM faces increasing competition from bigger rivals such as Sands China and Galaxy Entertainment, which already have projects on the popular Cotai Strip in Macau.
MGM has one casino on the peninsula and is building its second resort in Cotai.
"On the mass segment, MGM lost a bit of market share in the third quarter," Karen Tang, an analyst at Deutsche Bank, wrote in a research note.
The company still managed to grow mass revenue by 4 per cent from the second quarter, Tang added.
At its existing casino, MGM continues upgrading the main area while targeting premium mass customers.
The company planned to add 60 to 70 high-limit slot machines next year after remodelling its Supreme Lounge, chief executive Grant Bowie said.
Sands, Galaxy Entertainment and Melco Crown Entertainment are also adding new attractions to their casino resorts in Cotai to lure mainland gamblers, who make up two-thirds of gaming revenue in the city.
MGM's Cotai project was on track for an early 2016 opening, Bowie said.
Deutsche Bank lifted its price target for the company's stock to HK$29.20 from HK$26.80 yesterday on the back of improving visibility on the Cotai project. The bank has a "hold" rating on the stock, which closed 1.12 per cent higher at HK$27 yesterday.
Net revenue at MGM climbed 22 per cent to US$808.5 million, mainly because of VIP revenue and main-floor table games, according to the filing. Turnover at VIP-room gambling tables rose 28 per cent from a year earlier, and wins increased 31 per cent for main-floor tables and 4 per cent for slot machines.
Gaming revenue in Macau rose 17 per cent to US$33 billion in the first nine months, after totalling US$38 billion last year.