MGM China hits 'best quarter ever'

Net revenue climbed 6.4% to USD748m.

According to Maybank Kim Eng, MGM China recorded net revenues of USD748m up 6.4% YoY for the first quarter. While property adjusted EBITDA, we had its best quarter ever at USD180, up 10% YoY. This resulted in an increase in EBITDA margin improving 0.8 ppts to 26.2% as a result of better mass market gaming performance.

Here's more:

Implication: The VIP segment was lacklustre due to a lower win rate of 2.8% (1Q12: 3.2%), as a result VIP win stayed approximately the same as the previous quarter at HKD5.5b. Mass market floors and slots wins continue to be the key driver, up 25.6% to HKD1.6b and 19.3% to HKD0.59b.

Action: MGM Cotai broke ground in February and are in the final phase of appointing a partner for the project. The casino will feature 1,600 rooms, 2,500 slots and 500 tables once completed in 1H16.

MGM China is also adopting a regular dividend distribution policy for up to 35% of its annual profits to be paid semi-annually translating to a yield of 5-6%. The stocks trades at 10.6x FY13 Bloomberg consensus EV/EBITDA.