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Weather related delays

Damage caused by Typhoon Hato is one of the reasons for the opening of MGM Cotai being delayed to January 29 of 2018

The opening of MGM Cotai has been delayed to January 29 of next year, according to a filing last Friday by MGM China Holdings Limited with the Hong Kong Stock Exchange.
According to the release, the change from the previously announced opening date – scheduled for the last quarter of this year – was made in order to complete repair works after the damaged inflicted by the passage of Typhoon Hato on August 23, and in order to process governmental inspections necessary for obtaining relevant licences to operate.
The overall budget of the project is expected to increase from around HK$26 billion to HK$27 billion, excluding land and capitalised interest, after the company reassessed its project costs and the overall budget of the project.
The new property in Cotai will still open on time for the next Chinese New Year, set to start on February 16 of 2018.
According to a note sent by brokerage firm Sanford C. Bernstein, while MGM China was expecting its Cotai property to open in the last quarter of this year, investors were already expecting an opening in late 2017 or the first months of 2018.

A table issue
Analysts at the firm also didn’t consider the several-month delay as ‘meaningful from an investor perspective’ with most of the damage from the typhoon being minor and mostly covered by insurance companies.
For the Bernstein analysts, the most important announcement for the project will be the number of new-to-market gaming tables allocated to the property by the Macau Government.
‘As MGM Macau currently has a limited table allocation (under 430 tables), a low table allocation could be problematic for MGM as it would be forced to shift a larger than desired number of tables from its existing casino, which could lead to greater cannibalization than anticipated,’ the note stated.
In 2015, Galaxy Entertainment Group Ltd. and Melco Resorts and Entertainment both received 250 tables for their new Cotai properties, with Sands China Ltd. and Wynn Macau Ltd. receiving 100 new tables for The Parisian and Wynn Macau in 2016, plus 25 tables this year and in 2018.

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