MGM China Reports 2023 Annual Results

Rhea-AI Summary

MGM China Holdings Limited reports record-high performance across segments, with significant growth in market share and margin. The company's financial data for 2023 shows strong recovery in Macau, with impressive increases in daily visitor arrivals and gross gaming revenue. MGM China's net revenue grew by 369% from 2022, reaching HK$24.7 billion, and adjusted EBITDA hit a historical high of HK$7.2 billion, representing 117% of 2019 levels. The company's market share increased to 15.2% in 2023, up from 9.5% in 2019, with improved EBITDA margin of 29.3%. Quarterly performance also showed consistent growth, with fourth-quarter adjusted EBITDA up 16% from the previous quarter. The company maintained a healthy financial position with total liquidity of approximately HK$21.5 billion as of December 31, 2023.

Insights

Market Research Analyst

The reported increase in MGM China's market share and adjusted EBITDA margin reflects a robust recovery and operational efficiency that surpasses the industry average. The growth in gross gaming revenue (GGR) and net revenue indicates a strong rebound in the Macau gaming sector. The substantial rise in visitation numbers and the company's ability to capitalize on this influx of visitors by outperforming pre-COVID levels in several key metrics are particularly noteworthy. The strategic focus on mass GGR, which includes slot revenue, suggests a successful targeting of a broader customer base, which is less volatile and more profitable than VIP gaming segments.

From a market perspective, MGM China's performance could signal a broader recovery trend in the leisure and hospitality industry, potentially influencing investor sentiment towards gaming stocks in the region. The company's healthy liquidity position, with a significant amount of cash and cash equivalents, provides financial flexibility and could be leveraged for future growth initiatives or to withstand potential market downturns. This financial health is a positive indicator for stakeholders assessing the company's resilience and long-term prospects.

Financial Analyst

The record-high adjusted EBITDA and its margin, combined with sequential growth over four quarters, demonstrate MGM China's strong profitability and cost management. The adjusted EBITDA margin exceeding 2019's by 210 basis points is a strong indicator of improved operational efficiency and a higher quality of earnings. The growth in market share, particularly in the mass market segment, suggests successful competitive strategies and could lead to sustained revenue streams. Investors should note the positive trend in liquidity, as it indicates MGM China's ability to service debt, fund operations and invest in growth without immediate financial strain. This financial stability is crucial for investor confidence, especially in an industry subject to regulatory and economic fluctuations.

The significant year-on-year growth in daily GGR in January and the continued recovery to pre-COVID levels provide a positive outlook for the first quarter of 2024. This could influence stock performance in the short term as investors react to the company's momentum and industry recovery signs. However, it is essential to monitor the broader economic conditions and regulatory environment in Macau, as these factors can impact the gaming industry's performance.

Economist

The reported figures from MGM China are indicative of a macroeconomic recovery in Macau's gaming and tourism sectors. The 395% increase in average daily visitor arrivals is a substantial economic indicator, suggesting consumer confidence and disposable income levels are rebounding. This resurgence is critical for Macau's GDP, as the region relies heavily on tourism and gaming. The company's performance, particularly in mass market gaming, which tends to be more resilient to economic fluctuations, suggests a stable demand that could drive steady economic growth in the region.

Furthermore, the increase in MGM China's market share reflects competitive dynamics within the industry, where the company's strategic initiatives appear to be yielding results. The broader economic implications of such a recovery could lead to increased employment and investment opportunities in Macau. Stakeholders should consider these economic trends when assessing the potential for sustainable growth in the region's gaming industry and MGM China's role within it.

Record-High Performance Across Segments  Growth in Market Share and Margin

HONG KONG, Feb. 13, 2024 /PRNewswire/ -- MGM China Holdings Limited ("MGM China" or the "Company"; SEHK Stock Code: 2282) today announced the selected unaudited financial data of the Company and its subsidiaries (the "Group") for the three and 12 months ended December 31, 2023.

The Group is pleased to see a solid recovery in Macau since the market reopened in the beginning of last year. Macau saw average daily visitor arrival for 2023, up by 395% from 2022 to 77,296, recovered to 72% of 2019 pre-COVID levels.

Visitation has boosted growth of gross gaming revenue (GGR). Industry GGR recorded sequential growth over the quarters last year to reach MOP502 million per day in 2023, recovered to 63% of 2019.

• MGM China is delighted to see record-high performance across segments last year and continued to outperform industry recovery. Property visitation in 2023 was 106% of 2019. Daily GGR was 101% of 2019 and mass GGR (including slot) was 134% of pre-COVID levels.
• Net revenue of the Group grew by 369% from 2022 to HK$24.7 billion, or 108% of 2019.
• The Group saw adjusted EBITDA turnaround from 2022 to historical high of HK$7.2 billion, represented 117% of 2019.
• MGM China had market share of 15.2% for year 2023, up from 9.5% in 2019. MGM COTAI market share was 8.6% and MGM Macau was 6.6%.
• Adjusted EBITDA margin for the year 29.3%, 210 basis points higher than 2019, with a mass-focused business and continuous improvement in operational efficiency.
• On a quarterly basis, the Group recorded sequential growth for four consecutive quarters over daily GGR, mass GGR and Adjusted EBITDA. Fourth-quarter Adjusted EBITDA was up 16% from previously to HK$2.2 billion, with adjusted EBITDA margin of 28.5%.
• The Group maintained a healthy financial position. As of December 31, 2023, the Group had a total liquidity of approximately HK$21.5 billion, comprised of cash, cash equivalents and undrawn revolver.

The Group is delighted to see business volumes continued to grow in January. Market daily GGR further grew 4% from December to MOP624 million, implying a year-on-year growth of 67%, and 78% recovery of January 2019.

Kenneth Feng, President and Executive Director of MGM China said: "We are excited about the recovery in Macau and our outperformance across various business segments.

We will continue to innovate our products and services to enhance customer experience. We are also committed to bringing in more unique integrated tourism experiences to attract international visitors."

During the year, MGM China has expanded overseas offices in Kuala Lumpur, Manila, Seoul and Osaka. The Group had also held flagship entertainment and gastronomy events including MGM x RR1 Culinary Masters Macau, MGM Chef Nic Gastronomusic Fest and Oktoberfest Macau at MGM, which drew both local and international visitors.

As a supporter of cultural tourism, MGM again collaborated with world-renowned Portuguese artist Joana Vasconcelos to present a large-scale art installation Valkyrie Miss Dior at MGM COTAI. On the art front, the Group presented at MGM Theater To Infinity and Beyond: The Art of Hsiao Chin, an unprecedented large-scale immersive exhibition as part of Art Macao, a city-wide international event organized by the Macao SAR government. The Group has also announced the collaboration with Poly Culture Group to build a cutting-edge arts and culture museum at MGM MACAU.

In addition, MGM China is determined to bring in world-class events to Macau. The Group has organized MGM Macau Tennis Masters tournament with IMG featuring top international tennis players at the Macao East Asia Games Dome. The Group has also joined hand with the Macao Cultural Affairs Bureau to organize hush! Beach Concerts x Urban Yo~ga Wellfest, a multi-disciplinary festival which marks the debut of MGM's wellness IP Program that integrates tourism, health and music industries along the natural coastal Hac Sá Beach in Macau.

"We strive to develop MGM as a destination for visitors and customers, along with the diversification development of Macau. We are devoted in developing Macau into a global and diversified tourist destination through our concession commitments," said Kenneth Feng.

– END –

About MGM China Holdings Limited

MGM China Holdings Limited (HKEx: 2282) is a leading developer, owner and operator of gaming and lodging resorts in the Greater China region. We are the holding company of MGM Grand Paradise, SA which holds one of the six gaming concessions to run casino games in Macau. MGM Grand Paradise, SA owns and operates MGM MACAU, the award-winning premium integrated resort located on the Macau Peninsula and MGM COTAI, a contemporary luxury integrated resort in Cotai, which opened in early 2018 and more than doubles our presence in Macau. 

MGM China is majority owned by MGM Resorts International (NYSE: MGM) one of the world's leading global hospitality companies, operating a portfolio of destination resort brands including Bellagio, ARIA, MGM Grand, Mandalay Bay and Park MGM. For more information about MGM Resorts International, visit the Company's website at www.mgmresorts.com.

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SOURCE MGM China

FAQ

What was MGM China's net revenue growth in 2023?

MGM China's net revenue grew by 369% from 2022 to HK$24.7 billion in 2023.

What was the adjusted EBITDA for MGM China in 2023?

MGM China achieved a historical high adjusted EBITDA of HK$7.2 billion in 2023, representing 117% of 2019 levels.

What was MGM China's market share in 2023?

MGM China's market share in 2023 was 15.2%, up from 9.5% in 2019.

What was the EBITDA margin for MGM China in 2023?

MGM China's adjusted EBITDA margin for 2023 was 29.3%, 210 basis points higher than 2019.

What was the total liquidity of MGM China as of December 31, 2023?

As of December 31, 2023, MGM China had a total liquidity of approximately HK$21.5 billion.