MGM China Holdings Ltd is expecting to open its newest property ‘MGM Cotai’ located on the Cotai district in Macau during the fourth quarter of 2017 according to a recent announcement from the company.
James Murren, the chairman of MGM Resorts International, parent company of MGM China said the property was likely to open around the Golden Week. The Golden Week refers to the week of holiday around China’s National Day in October. Analysts have expressed optimism regarding the new property’s performance.
In a statement, analyst Grant Govertsen from brokerage Union Gaming said
Following the opening of Cotai we expect MGM China to enjoy significant upside, given what will be an exceptional uptick in room supply for the company, as well as the largest percentage increase in table supply for any of the ‘Big Six’.
The Big Six refer to the six main casinos operators functioning in Macau. MGM China which currently operates MGM Macau released its results for the first quarter of 2017 which showed the operating income to be around HKD568.09 million ($73.0 million), as measured under the International Financial Reporting Standards (IFRS).
There are differences between the figures provided in financial results released by parent MGM Resorts and those of MGM China since the two follow different accounting standards. MGM Resorts reported net revenues of $502 million for the unit for the first three months, which was a 7 percent increase over the previous period as measured under U.S. GAAP. Operating income was $73 million compared to $47 million for the same quarter in 2016.
Main floor table game revenue was up 17 percent as a result of the hold percentage increasing from 18 percent to 22 percent. VIP table games revenue dropped by 5 percent as a result of 16 percent decline in VIP turnover though it was partially offset by an increase in hold percentage which rose to 3.4 percent.
Analysts from Morgan Stanley banking group said that the property EBITDA had beaten their estimates by 5 percent, to reach HK$1.2 billion. The analysts attributed the improved performance to the shift to mass market from VIP.
On its part, MGM Resorts saw a stunning increase of 209 percent in quarterly net income, going from $207 million in the first quarter of 2016 to $67 million for the same period in 2017. Adjusted property EBITDA for all its U.S. properties was $648 million, an increase of 34 percent over the same period last year.