MGM China Earnings: Decent Results Continue to Lead Macao Peers, Fair Value Estimate Raised by 6%

We raise our MGM China fair value estimate to HKD 12.50 per share from HKD 11.80, following the firm’s continued outperformance in the second quarter with adjusted EBITDA of HKD 2.443 billion, 9% above Bloomberg consensus. MGM China is leading growth among its Macao peers during the quarter—gross gaming revenue, or GGR, and adjusted EBITDA were 37% and 68% above its 2019 levels, while industry GGR has just returned to 77% of its 2019 level. We think MGM China’s solid results demonstrate the firm’s strong operating efficiency with a deep understanding of customers. This, along with an increase in table allocation, successful remodeling and renovation of gaming floors and suite products, and utilization of data analytic tools, should continue to help the firm attract more quality customers with higher spending on both gaming and nongaming segments. We raise our 2024-28 net profit forecasts by 5%-13% and adjusted EBITDA by 4%-14%, to reflect a stronger-than-expected growth outlook.