China – MGM narrows loss in Macau as revenues double year-on-yearBy Phil - 5 August 2021
MGM China said that ‘Macau continued to see a choppy business environment during the [first half of the year] under the COVID-19 pandemic’ but that MGM China recorded total revenue of approximately HK$4.7bn, nearly double from HK$2.4bn same period a year ago.
For the first half of 2021, the Group recorded adjusted EBITDA of approximately HK$200.4m, compared to negative adjusted EBITDA of approximately HK$1bn previously. Overall occupancy rate was 61.5 per cent, up from 19.8 per cent in the same period of 2020.
Meanwhile, second-quarter market-wide GGR improved sequentially by seven per cent from the first quarter. For the three-month period, MGM China posted revenue of HK$2.4bn, up by five per cent sequentially. The Group recorded adjusted property EBITDA of HK$116m, a growth of 37 per cent from the first quarter.
MGM China continued to outperform the market given our strength in premium mass business. Daily GGR in second quarter was 42 per cent of 19Q4 levels, compared to market of 36 per cent. We maintained market share of approximately 11.2 per cent in the second quarter.
The group stated: “China is the major source of Macau’s travelers and the government asked people to avoid travelling in the first two months this year. The market started to stabilize in March with momentum growing in April and saw a solid Golden Week in May backed by premium mass recovery. Yet business went soft again in June given outbreak in Guangdong which resulted in travel restrictions.”
On a property basis, MGM Macau recorded revenue of approximately HK$1.3bn in the second quarter, the same as in the frist quarter, and adjusted EBITDA of approximately HK$171, up from HK$170 m. Occupancy improved sequentially to 85.9 per cent from 81.1 per cent.
For the three months, MGM Cotai recorded revenue of approximately HK$1.1bn, up from $981m and narrowed loss to negative adjusted EBITDA of approximately HK$55m (21Q1: negative HK$86m). Occupancy was 56.6 per cent compared to 47 per cent in the previous quarter. The Group maintained a healthy financial position. As of June 30, 2021, the Group had total liquidity of approximately HK$13.7 billion, comprised of cash and cash equivalent and undrawn revolver.
The company added: “We believe the rate of Macau’s recovery will continue to hinge on broader sentiment as well as the pace of vaccination rollouts throughout the region, which will ultimately lead to sustainable easing of travel restrictions. The opening of Macau-Hong Kong is also another important variable in Macau recovery. July was off to a better start when we saw visitation and business volumes pick up again. In July, market daily GGR grew 25 per cent month-on-month to HK$264m, approximately 35 per cent of 19Q4 levels. There are reported COVID-19 cases of Macau residents in August, that is expected to have impact on visitation and GGR in the short run. With the effort of Mainland China and Macau government to contain the outbreak and border restrictions easing over time, we see gradually growing demand for travel to Macau.”
Hubert Wang, President & Chief Operating Officer of MGM China said: “MGM China is confident in Macau’s longer-term growth prospects and committed to elevating our footprint in Macau. We have finalized the construction and fittings of the Emerald Tower Suites at MGM COTAI that we believe the product will be well received by our premium customers.”
The Group will officially open later the 28 luxurious suites, of 128 sq meter to 371 sq meter. It will increase our upscale suite inventory, so to accommodate different guest types.
“We believe our investments in premium product position us well for the broader recovery. At the same time, we will continue our effort and strategy in diversification and helping Macau to develop as a world’s tourism destination,” said Mr. Wang.