Photographer: Billy H.C. Kwok/Bloomberg

MGM China to gain 3 pct mass market share next year – Morgan Stanley

MGM China Holdings is likely to see its mass market share rise by at least 3 per cent next year thanks to an addition of gaming tables, investment bank Morgan Stanley predicted.

MGM China had 553 gaming tables at the end of 2019 – a number that went up to 750 under a new concession.

Of the six gaming operators in Macau that had their concessions extended for 10 years, it was the only one that secured additional gaming tables by a large number – up about 35.6 per cent.

The addition of gaming tables has already taken its market share from 8.2 per cent to 12.5 per cent, according to a recent note by analysts Praveen K Choudhary and Gareth Leung.

The two believes that the company’s share of the mass market will even go up from 10 per cent in 2019 to 13 per cent in 2024, making the gaming operator a ‘top pick’ in the eyes of the investment bank – which used to be Melco Resorts & Entertainment.

“MGM’s mass market share rose consistently during COVID, while MLCO’s declined,” said the analysts. “More importantly, our MGM estimates are 30% higher than the Street for 2024, as consensus is bearish on its ability to attain higher market share next year.”

The analysts also noted that both the gaming operators had high gearing ratios, with the net debt to 2019 EBITDA of MGM and Melco at 4.6x and 4.4x respectively.

As of the end of last year, the former had US$860 million (MOP6,940 million) in cash, and the latter US$1.8 billion.

The earliest bond maturing is US$750 million in May 2024 for MGM China, and US$1.5 billion in June or July 2025 for Melco.

However, MGM China should have liquidity support from its US-based parent company MGM Resorts, while Melco will spend about US$300 million in development or maintenance capex this year, the analysts said.