MGM China to generate $600 mil EBITDA in 2017

Tuesday 10th of May 2016

Fitch Ratings said it predicts MGM China to generate around $600 million of EBITDA in 2017, according to a note on Tuesday.

The ratings agency said the $600 million of EBITDA factors in about $200 million EBITDA at MGM Cotai and approximately 20 percent EBITDA decline at MGM Macau.

Fitch also affirmed the IDRs for MGM China Holdings and its co-borrower MGM Grand Paradise, S.A. (collectively MGM China) at 'BB' with a stable rating outlook.

It also upgraded MGM Resort International’s IDR to BB from B+, with a stable rating outlook.

The agency also added that given MGM China’s strategic importance to MGM, it links MGM China Issuer Default Rating (IDR) to MGM’s, and therefore may upgrade MGM China’s IDR to BB+ if and when it upgrades MGM’s IDR to BB+.

Last week, MGM China posted a steep drop in Q1 earnings and revenue.

MGM China recorded total revenue of HK$3.6 billion, a decrease of 25 percent from a year ago, but narrower than the 31 percent year-on-year decline in the prior quarter.

Adjusted EBITDA was HK$995 million ($128 million), down 23 percent from a year ago. The company said its business was negatively affected by low hold in both mass table games and in-house VIP operations.

Wells Fargo said later in a note that revenue and EBITDA were about 8-9 percent below the consensus forecast.

Bricks & Mortar EBITDA Rating