By Kimberley Kao
MGM China shares rose in Hong Kong trade after the Macau-focused casino operator reported better-than-expected fourth-quarter revenue.
Shares of MGM China were up 10% at 12.30 Hong Kong dollars (US$1.57) in Wednesday's afternoon trading, lifting gains this year to 24%.
The Las Vegas-based MGM Resorts International reported earnings for its units that showed MGM China's fourth-quarter net revenue nearly quintupled to US$983 million on easing Covid-19 entry restrictions in Macau.
Fourth-quarter adjusted property EBITDAR, a metric the company uses as its primary profit measure for reportable segments and underlying operating segments, hit a record US$262 million compared with a loss of US$55 million a year earlier.
For the full year, MGM China's revenue more than tripled to US$3.2 billion, while adjusted property EBITDAR was at US$867 million compared with a loss of US$203 million a year earlier.
The fourth quarter results were a strong beat, says Citi analyst George Choi in a research note, adding that MGM China will likely focus on optimizing yield on the casino floor and driving international tourism to the resorts.
"We like MGM China as we believe that, long term, it will be able to gain market share after it brings to Macau the non-gaming activities that have been a proven success in Las Vegas at its parent company MGM Resorts," Choi added.
Citi has a buy rating on the stock and raised its target price to HK$16.00 from HK$13.50.
Jefferies analyst Andrew Lee highlighted MGM China's market share hitting a historic high of 15.1% for 2023, up from 13.7% in 2022. He upgraded his rating to a buy from hold and raised the target price to HK$15.30 from HK$9.40.
"2024 will likely be a continuation of the recovery since 2023", he said, "especially with Mainland China travelers preferring short-haul travel, which will benefit Macau."
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
February 14, 2024 02:33 ET (07:33 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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