[ET Net News Agency, 16 October 2018] HSBC Global Research lowered its target price for
MGM China (02282) to HK$17 from HK$19, and maintained its "buy" rating.
As the only major opening in FY2018, MGM is in a good position to capture incremental
growth in FY2018 and FY2019, tthe research house noted. With VIP rooms added in phases
starting in September 2018, HSBC expects MGM to gain share from the competition, in both
VIP and premium mass, which is highly correlated with VIP.
The unveiling of the President's Club - a high-end premium mass area and mansion in 4Q
should help attract traffic too. When the whole eco-system (VIP, mass, and slot) is in
place, HSBC expects Cotai to gradually realise its full potential, as management expects
Cotai to benefit from the cluster effect.
HSBC lowered its market share assumptions for FY2018-20 for MGM to factor in the
slower-than-expected ramping of MGM Cotai amid VIP demand slowdown. Coupled with lower
market growth assumptions, the research house cut its FY2018-20 estimates by 6%, 19% and
24%, respectively. (KL)