GGRAsia – MGM Resorts CFO says Macau margins and shares to remain stable

Macau casino operator MGM China Holdings Ltd is expected to keep its gross gaming revenue (GGR) share in the Macau market “in the mid-teens” and its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin “in the high twenties.”

So said Jonathan Halkyard (file photo), chief financial officer (CFO) of the US majority shareholder, MGM Resorts International. He spoke Tuesday at the 32nd annual Leveraged Finance conference at Deutsche Bank.

“Our businesses in Macau are currently operating at a very high level,” said Mr. Halkyard.

MGM China operates the MGM Macau casino on the city peninsula and MGM Cotai in the newer Cotai casino district.

“Despite the fact that we only have about 12.5 percent of the (gaming) tables in the market and less than 10 percent of the suites in that market, these companies consistently achieve market share in the mid-teens,” he added.

“We expect this trend to continue and (EBITDA) margins to be in the high 20s, and that’s without the benefit of the upscale retail that some of our competitors have,” the CFO noted.

He added: “So I think our market share is in the teens and our (EBITDA) margins are in the high twenties.”

In August, MGM China reported adjusted EBITDA margin in the first half of the year reached a “record level” by 30.5 percent, compared to 29.7 percent in the same period in 2023 and 27.2 percent in 2019.

The company said its GGR market share in Macau “increased to 16.5 percent” in the six-month period, from 14.9 percent a year earlier and 9.5 percent in 2019.

According to industry commentators, as competition among operators in Macau intensifies, especially for premium-mass customers, companies are spending more on promotional and reinvestment activities.

In his comments Tuesday, Mr Halkyard said the company had “not seen any real increase in promotional activity” in Macau, “nor have we taken any other actions other than what I think are quite astute moves by our local management team to introduce offers and products that our customers really like, that are not particularly expensive but that keep them coming back.”

The CEO also made some comments about the company casino-resort plan in Osaka, Japan, which is scheduled to open in 2030.

“The official start of construction will take place in May next year, but work on various construction sites has already begun,” the financial director said.

He said Expo 2025 – also on Osaka’s Yumeshima Island – was important to the MGM Osaka project “because it provides some of the infrastructure that will be important for our integrated resort, in terms of transportation and site improvements.”

MGM Osaka is a 1.27 trillion yen (currently $8.70 billion) project being developed by MGM Resorts, Japanese company Orix Corp. and a group of local minority investors.

Mr Halkyard said the group had finalised 530 billion yen in bank financing in March at a “very attractive price”.

He stated: “Our capital investment has already started this year with almost US$200 million. And over the next four and a half years, we will invest just over US$2 billion in the project, together with our partners, Orix and minority investors.”

“Then we will start drawing on the credit line, and this will take place in 2028-2029, until the project is completed and opened in 2030,” the director added.