MGM Resorts narrows third-quarter net loss
Unlike its rivals, MGM Resorts International doesn’t have multiple casinos in Macau.
Yet.
Company officials on Thursday revealed some of the plans for developing a new hotel-casino project on the Cotai Strip region in the coming years, pending approval and a land grant from the Macau government.
And, MGM Resorts said it is expanding casino space inside MGM Grand Macau, the company’s 600-room hotel-casino that opened in December 2007.
Even with just one resort, results from Macau helped MGM Resorts narrow its third-quarter net loss.
The company, which operates 10 Strip hotel-casinos including Bellagio, MGM Grand and the CityCenter complex, lost $123.8 million, or 25 cents per share, in the quarter ended Sept. 30. A year ago the company lost $318 million, or 72 cents per share. Analysts polled by FactSet expected a loss of 15 cents per share.
MGM Resort’s companywide revenue was $2.23 billion, a 42 percent increase compared with $1.57 billion in the same quarter last year.
“We find the results to be largely in line with our views in the seasonally slow third quarter,” Deutsche Bank gaming analyst Carlo Santarelli told investors in a research note.
MGM Grand Macau, earned net revenues of $623 million in the quarter, compared with $362 million a year ago. The company credited an increase of 83 percent in volume for high-end table game play as a major reason for the boost.
MGM Resorts owns a controlling 51 percent stake in the MGM Grand Macau after the company listed 20 percent of the property on the Hong Kong Stock Exchange in June. Hong Kong businesswoman Pansy Ho controls the remaining 29 percent.
In an interview after a conference call with analysts to discuss the quarterly results, MGM Resorts Chairman Jim Murren said the IPO allows the company to provide much more color on its Macau casino to the investment community.
“As a single property, MGM Macau is one of the most successful and profitable properties in Macau,” Murren said.
The property is somewhat restricted by its location, on the peninsula region of Macau, to add more hotel rooms. However, the MGM Resorts has deals in place with the neighboring Mandarin Oriental and other nongaming hotels to house visitors to the property.
“We’ve been creative in forming alliances,” Murren said.
The company is adding some 40,000 square feet of casino space in the MGM Grand Macau that was “shelled out” in the original construction but never completed. The expansion allows MGM Resorts to create casino space targeted to various segments of the Macau market.
The other focus is developing a resort on the Cotai Strip region, where MGM Resorts has 18 acres. Murren told investors Thursday he wants to build a 1,600-room hotel-casino with 50 table games and 2,500 slot machines.
Murren wouldn’t reveal a budget for the project but hinted the price could be in line with the recently opened Galaxy Macau on the Cotai Strip, which cost Hong Kong-based Galaxy Entertainment $1.9 billion.
On the conference call, Murren said the yet-to-be-named Cotai property would have restaurant options “not currently available in Macau,” retail, and entertainment venues with “highly advanced technology that will add a new level of excitement.”
What’s missing is the land grant from the Macau government, but Murren is confident that could come within a reasonable time frame.
The company is focused on Macau’s continued growth. The region, which produced $23.5 billion in gaming revenues in 2010 — five times more than the Strip — are up 45 percent through October compared with a year ago.
