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MGM China forecast cut short by 12%

Morgan Stanley has reduced its EBITDA forecast for MGM China Holdings Ltd by a staggering 12%. 

mgmcotai

Analysts said they expect MGM China to report an EBITDA of HKD4.86bn ($619.24m) for the year.

Additionally, the firm has also predicted that MGM China’s EBITDA next year would increase to KHD6.77bn ($862.6m) again this forecast falls short of the previous forecast by 17%.

In the memo which outlined this forecast Morgan Stanley said: “We expect MGM to report Q2 property EBITDA of $142m (13% lower) 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.”

According to Morgan Stanley, this can be attributed to the slow build up of business at MGM’s Cotai property, a lack of VIP business and the cannibalisation of Peninsula casinos.

Despite this the international firm remains positive that MGM China will make significant growth in the long term once MGM’s Cotai property become more established.

The memo also read: “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.”

MGM’s Cotai property opened earlier this year in February and currently offer 100 live dealer tables, with promises of another 25 coming next January.

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