MGM China is expected to report the weakest EBITDA among its peers in Q2 due to a slower ramp-up of its Cotai property, absence of VIP business, and the cannibalisation of Peninsula casinos, say analysts from Morgan Stanley.
“We expect MGM to report Q2 property EBITDA of US$142m (down 13 per cent), 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.”
The brokerage has cut its 2018/19 EBITDA estimates by 12 per cent and 17 per cent, respectively, which is now situated around nine and four per cent lower than consensus. However, Morgan Stanley reiterates that it remains positive on MGM China’s long-term growth prospects.
“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.”
Morgan Stanley expects MGM Cotai to generate US$400m of EBITDA in 2019.
Source: Asia Gaming Brief
