2Q15 Adjusted EBITDA In-line with our Forecast, Maintain ...pg.jrj.com.cn/acc/Res/HK_RES/STOCK/2015/8/27/a82ef017-7cb4-4930-a… · 君安研究 a 设美高梅路氹在梅中国

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See the last page for disclaimer Page 1 of 12

Company Report: MGM China (02282 HK) Noah Hudson

公司报告：美高梅中国 (02282 HK) +86 755 23976684

[email protected]

27 August 2015

2Q15 Adjusted EBITDA In-line with our Forecast, Maintain "Neutral" 2015年2季度调整后EBITDA符合我们的预期，维持“中性”

MGM China (the “Company”)’s 2Q15 adjusted EBITDA plunged 30.2%

YoY, missing Bloomberg consensus forecasts by 6.2% but matching

our forecast. Adjusted EBITDA margin dropped 1.0 ppt YoY (down 2.6 ppt

QoQ) to 26.6%, worse than we had expected. As in 1Q15, the Company once

again outperformed in the mass segment, but this was offset by VIP

underperformance, resulting in casino gross revenue plunge of 37.3% YoY,

in-line with the 37.4% YoY decline in Macau’s 2Q15 Gross Gaming Revenue.

We adjust up 2015 to 2017 adjusted EBITDA forecasts by 0.6%, 7.2% and

2.8%, respectively. We previously assumed MGM Cotai would open at end

of 4Q16, now assume it opens in middle of 4Q16. We revise up 2015 to 2017

revenue forecasts by 5.7%, 15.0% and 7.3%, respectively. We forecast

2015-2017 adjusted EBITDA of HK$4.7 billion, HK$4.2 billion and HK$5.6

billion, reflecting growth of -29.8%, -9.5% and 31.7%, respectively. We

forecast 2015-2017 fully diluted EPS of HK$0.724, HK$0.639 and HK$0.614,

reflecting growth of -51.7%, -11.8% and -4.0%, respectively.

Maintain MGM China’s "Neutral" investment rating and lower our target

price from HK$14.00 to HK$12.10. Our target price is based on the

Company's average forward EV/Adjusted EBITDA over the last five years of

14.1x.

美高梅中国（“公司”）2015 年 2 季度调整后的 EBITDA 同比下跌 30.2%，低于彭博市

场预期 6.2%但是与我们的预期一致。调整后 EBITDA 利润率同比下降了 1.0 个百分点（环

比下降了 2.6 个百分点）至 26.6%，差于我们预期。跟 1 季度一样，公司中场表现好于市

场，但是被贵宾分部差于市场的表现所抵消，导致公司博彩总收入同比下降 37.3%，接近

澳门 2015 年 2 季度总博彩收入 37.4%的同比下降。

我们分别上调 2015 年至 2017 年调整后 EBITDA预期 0.6%、7.2%和 2.8%。我们原来假

设美高梅路氹在 2016 年 4 季度末开业，但是现在假设在 2016 年 4 季度中开业。我们分别

上调 2015 年至 2017 年收入预期 5.7%、15.0%和 7.3%。我们分别预期 2015 年至 2017

年调整后 EBITDA 为 47 亿港元、42 亿港元和 56 亿港元，相当于-29.8%、-9.5%和 31.7%

增长率。我们分别预期 2015 年至 2017 年全面摊薄每股净利为 0.724 港元、0.639 港元和

0.614 港元，相当于-51.7%、-11.8%和-4.0%增长率。

维持美高梅中国投资评级为“中性”，下调目标价从 14.00 港元至 12.10 港元。我们的目

标价基于公司近 5 年平均后 4 个季度预测 EV/EBITDA（就是 14.1 倍）。

Rating: Neutral Maintained

评级：中性 (维持)

6-18m TP 目标价: HK$12.10

Revised from 原目标价: HK$14.00

Share price 股价： HK$12.160

Stock performance 股价表现

Change in Share Price

股价变动

1 M

1 个月

3 M

3 个月

1 Y

1 年

Abs. %

绝对变动 % (28.4) (18.6) (52.3)

Rel. % to HS index

相对恒指变动 % (12.3) 6.8 (36.3)

Avg. share price(HK$)

平均股价（港元） 15.4 14.8 17.5

Source: Bloomberg , Guotai Junan In ternational.

Year End 年结

Turnover 收入

Net Profit 股东净利

EPS 每股净利

EPS 每股净利变动

PER 市盈率

BPS 每股净资产

PBR 市净率

DPS 每股股息

Yield 股息率

ROE 净资产收益率

12/31 (HKD m) (HKD m) (HKD) (△ %) (x) (HKD) (x) (HKD) (%) (%)

2013A 25,728 5,334 1.404 17.7 8.7 1.730 7.0 1.510 12.4 85.4

2014A 25,454 5,707 1.502 7.0 8.1 1.669 7.3 1.341 11.0 88.4

2015F 17,564 2,755 0.725 (51.7) 16.8 2.055 5.9 0.326 2.7 38.9

2016F 15,893 2,431 0.639 (11.8) 19.0 2.394 5.1 0.288 2.4 28.7

2017F 20,929 2,335 0.614 (3.9) 19.8 2.713 4.5 0.276 2.3 24.1

Shares in issue (m) 总股数 (m) 3,800.0 Major shareholder 大股东 MGM Resorts International 51.0%

Market cap. (HK$ m) 市值 (HK$ m) 46,208.0 Free float (%) 自由流通比率 (%) 21.6

3 month average vol. 3 个月平均成交股数 (‘000) 7,344.4 FY15 Net gearing (%) FY15 净负债/股东资金 (%) 100.9

52 Weeks high/low (HK$) 52 周高/低 25.664 / 12.000 FY15 Est. NAV (HK$) FY15 每股估值（港元） 15.5

Source: the Company, Guotai Junan International.

(60.0)

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Aug-14 Oct-14 Nov-14 Jan-15 Feb-15 Apr-15 May-15 Jul-15 Aug-15

% return

HSI MGM China

国泰君安版权所有发送给公司内部用户.qfii小组:[email protected] p1


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1H15 RESULTS REVIEW

MGM China (the “Company”)’s 2Q15 adjusted EBITDA missed Bloomberg consensus forecasts by 6.2% (and met our

forecast) as adjusted EBITDA margin increased 2.6 ppt QoQ to 26.6%. Adjusted EBITDA decreased 30.2% YoY and 2.0%

QoQ to HK$1,149 million.

Casino gross win plunged 37.3% YoY, in-line with the 37.4% decline in Macau gross gaming revenue in 2Q15. The

Company's 2Q15 total casino gross win was HK$5,239 million, down 13.7% QoQ. The Company’s 2Q15 total net revenue

was 15.9% less than our forecast, with VIP, mass tables and slot gross win 17.1%, 16.0% and 3.6%, respectively, less than

we were expecting. The Company's 2Q15 total casino net revenue was 6.1% higher than we had last forecast.

Table-1: MGM China Results

2Q14 3Q14 4Q14 1Q15 2Q15 QoQ YoY

HK$ million unless otherwise indicated

(% or ppt) (% or ppt)

VIP Segment

VIP Tables (end of quarter) 255 210 195 188 174 (7.4%) (31.8%)

VIP Daily Turnover/Table 9.56 9.17 9.72 6.47 5.69 (12.1%) (40.5%)

VIP Daily Gross Win/Table (HK$) 260,900 249,300 249,600 215,500 182,500 (15.3%) (30.0%)

VIP turnover 195,269 177,272 174,435 109,664 90,345 (17.6%) (53.7%)

VIP gross win 5,332 4,820 4,479 3,652 2,898 (20.7%) (45.6%)

Win Rate (% of Turnover) 2.7% 2.7% 2.6% 3.3% 3.2% (0.1) ppt 0.5 ppt

Mass Market

Mass Tables (end of quarter) 197 210 228 236 246 4.2% 24.9%

Mass Daily Drop/Table (HK$) 547,427 475,204 408,584 348,631 320,274 (8.1%) (41.5%)

Mass Daily Gross Win/Table (HK$) 140,100 127,600 106,000 94,500 85,400 (9.6%) (39.0%)

Mass Market Gross Win 2,508 2,467 2,218 2,005 1,914 (4.6%) (23.7%)

Slot Machines

Slot Machines (end of quarter) 1,205 1,159 1,133 1,126 1,205 7.0% 0.0%

Slot Daily Handle/Machine (HK$) 109,295 99,021 100,000 96,728 91,631 (5.3%) (16.2%)

Slot Daily Gross Win/Machine (HK$) 4,700 4,700 3,900 4,000 4,100 2.5% (12.8%)

Slot Machine Handle 11,973 10,529 10,521 9,897 9,545 (3.6%) (20.3%)

Slot Machine Gross Win 515 500 405 409 427 4.4% (17.0%)

Win Rate (% of Handle) 4.30% 4.75% 3.85% 4.14% 4.47% 0.3 ppt 0.2 ppt

Total Casino Gross Win 8,355 7,787 7,102 6,067 5,239 (13.7%) (37.3%)

Hotel Performance

Average Occupancy Rate 98.7% 98.8% 98.9% 98.0% 98.4% 0.4 ppt (0.3) ppt

Adjusted ADR (HK$) 2,116 2,074 2,134 2,201 2,138 (2.9%) 1.0%

Adjusted RevPAR (HK$) 2,297 2,254 2,322 2,373 2,314 (2.5%) 0.7%

Net Revenue 6,419 6,157 5,574 4,887 4,317 (11.7%) (32.7%)

Operating Expenses (4,994) (4,699) (4,359) (3,946) (3,514) (10.9%) (29.6%)

% of operating revenue (net) 77.8% 76.3% 78.2% 80.8% 81.4% 0.7 ppt 3.6 ppt

Operating Profit 1,425 1,457 1,215 940 802 (14.7%) (43.7%)

Operating profit margin 22.2% 23.7% 21.8% 19.2% 18.6% (0.7) ppt (3.6) ppt

Adjusted EBITDA 1,646 1,679 1,459 1,173 1,149 (2.0%) (30.2%)

Adjusted EBITDA margin 25.6% 27.3% 26.2% 24.0% 26.6% 2.6 ppt 1.0 ppt




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In June, the Company completed the first phase of expansion of its "Supreme Lounge", including adding 61

high-limit slot machines. So far customers have reacted positively to the remodeling, according to Company management.

The Supreme Lounge was first introduced in December 2010 on the main gaming floor aimed at the high end segment of the

mass market.

The Company's shift towards the high-margin main floor business continued in 2Q15 with a record high of 80% of

profit coming from the mass segment. The Company continues to shift tables from VIP to mass with an additional 49 tables

to the main floor versus last year and this now represents nearly 60% of table allocation. Despite additional tables on the main

floor and an increase in table operating hours, the Company has maintained a stable average head count per open hour.

MGM China’s 2Q15 VIP turnover plunged 53.7% YoY (17.6% QoQ), worse than the 42.2% YoY decline (16.2% QoQ

decline) in Macau's VIP gross gaming revenue ("GGR") for the quarter. The Company’s 2Q15 VIP turnover was HK$90.3

billion. The number of VIP tables decreased to just 174 at the end of 2Q15 compared to 188 tables in 1Q15 and 255 in 2Q14.

In addition, we estimate that average daily turnover per VIP table decreased by 40.5% YoY to HK$5.7 million. VIP gross win

fell by 45.6% YoY to HK$2.898 billion on lower turnover partially offset by higher VIP win percentage of 3.2%, up from 2.7% in

2Q14.

The Company’s mass market table games gross win dropped 23.7% YoY (but just 4.6% QoQ), better than the 30.2%

YoY decline (6.7% QoQ decline) in Macau’s 2Q15 mass market GGR. MGM China’s mass market table games gross win

was HK$1,914 million in 2Q15. The number of mass gaming tables was 246 by the end of 2Q15 more than the 236 tables in

1Q15 and but less than the 197 in 2Q14.

Slot machine handle decreased by 20.3% YoY to HK$9.545 billion. The Company had 1,205 slot machines in operation at

the end of 2Q15, the same quantity as at the end of 2Q14. Average daily handle per slot decreased by 16.2% YoY from to

HK$92,000. Somewhat offsetting the lower handle was slot machine win percentage, which increased from 4.3% in 2Q14 to

4.5% in 2Q15. As a result, win per unit per day was 12.8% lower YoY at HK$4,100 and slot machine gross win decreased 17.0%

YoY to HK$427.1 million.

MGM China’s hotel was near full capacity in 2Q15 as occupancy rate was 98.4%. Occupancy at MGM China of 98.4% in

2Q15 was slightly lower than 98.7% in the prior-year period. RevPAR rose 0.7% YoY to HK$2,314.

MGM China’s 2Q15 market share was unchanged YoY at 9.5% and down slightly from 9.6% in 1Q15. In 2Q15, the

Company's VIP market share was 9.5%, down from 10.0% the same quarter last year and also 10.0% in the previous quarter.

In mass market (tables and slots), MGM China's market share increased from 8.6% in the same quarter last year and 9.2% in

the previous quarter to 9.5% in 2Q15.

Figure-1: MGM China Market Share, Annual Figure-2: MGM China Market Share, Quarterly

Source: the Company, Gaming Inspection and Coordination Bureau Macao SAR.

Source: the Company, Gaming Inspection and Coordination Bureau Macao SAR.

9.0% 11.2%10.5% 10.9%

10.4%

8.7% 8.8% 8.6%7.9%

8.6%

0%

2%

4%

6%

8%

10%

12%

14%

2010A 2011A 2012A 2013A 2014A

VIP Mass Market

10.9%11.5%

10.7%10.0%

10.6%10.0%10.0%

9.5%

7.8%7.2%

8.2% 8.6% 8.5%9.2% 9.2% 9.5%

0%

2%

4%

6%

8%

10%

12%

14%

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

VIP Mass Market



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Figure-3: MGM China’s VIP Tables, Quantity and % of

Company's Total Tables

Figure-4: MGM China’s Mass Tables, Quantity and % of

Company's Total Tables

Source: the Company. Source: the Company.

We maintain our assumption of 45.0% dividend payout ratio for 2015. MGM China announced an interim dividend of

HK$0.156 per share, which represents a payout ratio of 34.9%, almost exactly the same as the 35.1% payout ratio for the

Company's 2014 interim dividend. For the full year 2014, total dividends represented a payout ratio of 89.3%. However, due to

weakening operating cash flows and high remaining capex needs, we assume a dividend payout ratio of 45.0% in 2015.

The Company remains on target to open its new casino resort, MGM Cotai, in 4Q16. The Company aims to complete all

floors in the hotel tower by early November this year. The majority of contracts for the project have already been awarded and

the Company will be commencing the set out of the casino areas this month.

We previously assumed MGM Cotai would open at end of 4Q16, now assume it opens in middle of 4Q16. As the time to

opening draws closer and since the Company maintains its target to open MGM Cotai on-time, we feel more comfortable

assuming a middle of 4Q16 opening in our forecast model. We assume MGM Cotai will be granted 150 gaming tables, the

same number granted to Galaxy Macau Phase II & Broadway.

We revise up 2015 to 2017 revenue forecasts by 5.7%, 15.0% and 7.3%, respectively. The Company's 2Q15 gaming

revenue was 6.1% higher than we had last expected, and so we adjust up total revenue forecast for 2015. Revenues for 2016

and 2017 are adjusted up as we now assume a slightly earlier opening date for MGM Cotai.

We adjust up 2015 to 2017 adjusted EBITDA forecasts by 0.6%, 7.2% and 2.8%, respectively. We forecast 2015-2017

adjusted EBITDA of HK$4.7 billion, HK$4.2 billion and HK$5.6 billion, reflecting growth of -29.8%, -9.5% and 31.7%,

respectively. We forecast 2015-2017 fully diluted EPS of HK$0.724, HK$0.639 and HK$0.614, reflecting growth of -51.7%,

-11.8% and -4.0%, respectively.

234 235 234 255 210 195 188 174

55.6%

56.0%

54.9%56.4%

50.0%

46.1%44.3%

41.4%

40%

45%

50%

55%

60%

65%

70%

-

50

100

150

200

250

300

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

VIP Tables (at period end)% of Company's Total Tables

Tables

187 185 192 197 210 228 236 246

44.4%

44.0%

45.1%

43.6%

50.0%

53.9%55.7%

58.6%

30%

35%

40%

45%

50%

55%

60%

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50

100

150

200

250

300

3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Mass Market Tables (at period end)% of Company's Total Tables

Tables



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Table-2: Forecast Revisions

HK$ million Old New Change (% or ppt)

(Except EPS & RevPAR) 2015F 2016F 2017F 2015F 2016F 2017F 2015F 2016F 2017F

VIP Segment

VIP turnover 377,519 306,944 452,484 368,426 317,069 444,004 (2.4%) 3.3% (1.9%)

VIP gross win 11,339 8,808 12,984 11,953 10,171 14,242 5.4% 15.5% 9.7%

Win rate (% of turnover) 3.00% 2.87% 2.87% 3.24% 3.21% 3.21% 0.2 ppt 0.3 ppt 0.3 ppt

Mass Segment

Mass market gross win 7,810 7,039 9,799 7,962 7,841 9,917 1.9% 11.4% 1.2%

Slot Machines

Slot machine handle 34,430 28,352 28,949 37,093 32,455 33,139 7.7% 14.5% 14.5%

Slot machine gross win 1,424 1,172 1,197 1,626 1,452 1,483 14.2% 23.9% 23.9%

Win rate (% of turnover) 4.14% 4.14% 4.14% 4.38% 4.47% 4.47% 0.2 ppt 0.3 ppt 0.3 ppt

Commissions & discounts (4,289) (3,548) (4,999) (4,323) (3,906) (5,146) 0.8% 10.1% 2.9%

Casino Revenue (net) 16,284 13,471 18,981 17,218 15,558 20,496 5.7% 15.5% 8.0%

Average Occupancy Rate 96.4% 93.4% 90.4% 97.0% 94.0% 91.0% 0.7 ppt 0.7 ppt 0.7 ppt

Adjusted ADR (HK$) 2,307 2,610 2,953 2,108 1,875 1,668 (8.6%) (28.2%) (43.5%)

Adjusted RevPAR (HK$) 2,444 2,680 2,934 2,250 1,940 1,671 (7.9%) (27.6%) (43.1%)

Non-Casino Rev. (net) 337 351 531 346 335 432 2.7% (4.6%) (18.6%)

Total Revenues (net) 16,620 13,822 19,513 17,564 15,893 20,929 5.7% 15.0% 7.3%

Operating Income 3,392 2,689 2,734 2,866 2,531 2,456 (15.5%) (5.9%) (10.2%)

Operating Income Margin 20.4% 19.5% 14.0% 16.3% 15.9% 11.7% (4.1) ppt (3.5) ppt (2.3) ppt

Adjusted EBITDA 4,650 3,945 5,418 4,675 4,230 5,571 0.6% 7.2% 2.8%

Adjusted EBITDA Margin 28.0% 28.5% 27.8% 26.6% 26.6% 26.6% (1.4) ppt (1.9) ppt (1.1) ppt

Net Income 3,065 1,918 1,639 2,755 2,431 2,335 (10.1%) 26.7% 42.5%

Net Income Margin 18.4% 13.9% 8.4% 15.7% 15.3% 11.2% (2.8) ppt 1.4 ppt 2.8 ppt

EPS, basic (HK$) 0.806 0.505 0.431 0.725 0.639 0.614 (10.1%) 26.7% 42.5%

EPS, diluted (HK$) 0.806 0.504 0.431 0.724 0.639 0.614 (10.1%) 26.7% 42.5%

Source: Guotai Junan International.

VALUATION

The Macau gaming sector is currently trading at forward EV/EBITDA of just 10.8x, which is a 23.4% discount to the

historical average of 14.1x. Currently trading at 13.0x forward EV/EBITDA, MGM China is trading at an 8.0% discount to its

own historical average forward EV/EBITDA of 14.1x, and is trading 20.3% above the sector's forward EV/EBITDA of 10.8x.

We lower our target price from HK$14.00 to HK$12.10, maintain "Neutral" investment rating. Our target price is based

on forward (next four quarters) EV/Adjusted EBITDA of 14.1x, which is equivalent to the Company's average forward (next

four quarters) EV/Adjusted EBITDA over the last five years. Our target price is also a 21.9% discount to our DCF derived NAV

of HK$15.49.



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Table-3: Gaming Sector Peers Comparison

Company Stock Crncy Price M-Cap PE EV/Adjusted EBITDA ROE PB

Code (mn) HKD mil Hist Avg. Current Hist Avg. Current 15F 15F

Fwd Fwd 14F 15F 16F Fwd Fwd 14F 15F 16F (%)

HK Operators

Galaxy Entertain 27 HK HKD 24.250 103,239 19.9 16.5 16.5 14.4 13.7 14.4 7.8 9.7 8.4 8.1 19.1 3.5

Melco Crown-Adr MPEL US USD 17.980 75,757 23.3 33.2 37.4 26.6 21.5 13.8 12.6 13.3 9.3 8.3 5.4 2.2

Mgm China 2282 HK HKD 12.160 46,208 15.2 14.2 14.2 16.0 12.7 14.1 13.0 13.0 13.8 9.3 42.7 2.9

Sands China Ltd 1928 HK HKD 26.450 213,424 18.6 17.5 17.5 17.3 15.3 14.8 11.9 13.5 13.3 11.3 25.7 4.6

Sjm Holdings Ltd 880 HK HKD 6.970 39,427 12.7 10.9 10.9 12.4 15.1 9.1 4.7 5.3 7.2 8.9 14.8 1.6

Wynn Macau Ltd 1128 HK HKD 12.460 64,736 18.6 20.6 20.6 19.2 14.6 14.7 12.1 16.6 14.0 10.5 40.3 10.4

Simple Average 18.1 18.8 19.5 17.6 15.5 13.5 10.3 11.9 11.0 9.4 24.7 4.2

Weighted Average 18.8 19.1 19.7 17.8 15.5 14.1 10.8 12.5 11.5 9.8 24.0 4.4

USA - Listed

Boyd Gaming Corp BYD US USD 15.650 13,456 64.3 24.7 29.9 20.8 17.2 8.9 8.6 8.7 8.0 7.3 9.2 3.8

Caesars Entertai CZR US USD 8.470 9,519 0.1 0.2 0.2 n.a. n.a. 11.8 n.a. n.a. n.a. n.a. n.a. n.a.

Isle Of Capri ISLE US USD 16.390 5,169 39.3 15.1 126.1 15.8 13.9 7.1 7.4 8.2 7.3 6.7 24.2 28.3

Las Vegas Sands LVS US USD 44.730 276,453 18.4 17.8 17.3 16.9 15.6 12.2 11.1 11.1 10.9 10.3 25.6 4.6

Mgm Resorts Inte MGM US USD 19.210 83,836 72.1 44.6 36.6 35.8 19.9 11.3 11.6 11.8 11.7 9.3 5.5 2.0

Penn Natl Gaming PENN US USD 17.330 10,770 36.4 20.2 28.5 17.9 19.2 6.8 7.0 8.4 6.8 5.9 9.0 2.4

Simple Average 38.4 20.4 39.7 21.4 17.2 9.7 9.1 9.7 9.0 7.9 14.7 8.2


Other - Listed

Genting Singapor GENS SP SGD 0.755 50,094 22.9 18.0 21.6 17.2 15.4 11.1 8.1 8.1 6.9 6.3 4.6 1.0

Genting Malaysia GENM MK MYR 3.930 40,765 15.7 16.2 16.2 14.6 13.1 8.3 8.5 8.5 7.4 6.5 8.3 1.3

Bloomberry Res BLOOM PM PHP 6.590 12,068 30.3 57.3 29.3 16.6 13.2 16.8 8.0 8.0 6.2 5.2 9.3 2.6

Echo Entert Grp EGP AU AUD 4.950 22,588 17.3 18.6 24.1 17.8 16.5 7.8 8.9 9.2 8.6 8.1 5.7 1.3

Belle Corp BEL PM PHP 3.040 5,327 30.3 9.4 9.4 7.3 7.8 23.7 9.0 9.0 6.0 3.8 13.2 1.3

Simple Average 23.3 23.9 20.1 14.7 13.2 13.5 8.5 8.5 7.0 6.0 8.2 1.5


Source: Bloomberg, Guotai Junan International.

Table-4: DCF Valuation

Risk Free Rate 1.80% Sum of PV FCFF (HK$ mn) 31,583

Market Return 13.87% + PV Terminal Value (HK$ mn) 34,451

Market Risk Premium 12.07% Enterprise Value (HK$ mn) 66,034

Adj. Beta 1.0 - Net Debt/(cash) (HK$ mn) 7,141

Equity Discount Rate 13.87% Equity Value (HK$ mn) 58,893

Shares Outstanding (mn) 3,801

After Tax Cost of Debt 0.0% NAV per share (HK$) 15.49

D/(D+E) 40.0%

E/(D+E) 60.0%

WACC 8.3%

Long term growth rate 3.0%

Source: Bloomberg, the Company, Guotai Junan International.



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Figure-5: MGM China’s Net Revenue Breakdown, Figure-6: MGM China’s Gross Gaming Rev. Breakdown

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Figure-7: VIP Average Daily Turnover per Table Figure-8: Mass Market Win per Table per Day


Figure-9: MGM China VIP GGR Figure-10: MGM China Mass Market GGR


98.8%

98.8%

Room Food & Beverage

Retail & Other Casino Revenue (Net)

2014

2015F

64.9%

28.9%

6.2%

55.5%

37.0%

7.5%

VIP Mass Tables Slot Machine

2014

2015F

10.52 9.80

5.60 4.85 4.93

19.7%

-6.9%

-42.8%

-13.5%

1.7%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

-

2

4

6

8

10

12

14

16

18

2013A 2014A 2015F 2016F 2017F

VIP, Average Daily Turnover per Table YoY

HK$ mn

103.3

126.4

88.6 79.5 81.0

40.5%

22.4%

-29.9%

-10.2%

1.9%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-

20

40

60

80

100

120

140

2013A 2014A 2015F 2016F 2017F

Mass Market Win /Unit /Day YoY

HK$ 1,000

25.2 21.4 12.0 10.2 14.2

17.5%

-15.3%

-44.1%

-14.9%

40.0%

-60%

-40%

-20%

0%

20%

40%

60%

-

5

10

15

20

25

30

2013A 2014A 2015F 2016F 2017F

VIP VIP Growth (R)HK$ Bn

7.1

9.5

8.0 7.8

9.9

25.6%

33.8%

-16.4%

-1.5%

26.5%

-20%

-10%

0%

10%

20%

30%

40%

-

2

4

6

8

10

12

2013A 2014A 2015F 2016F 2017F

Mass Tables Growth (R)

HK$ Bn



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Figure-11: MGM China Hotel Performance


Figure-12: MGM China Casino Net Revenue Figure-13: MGM China Total Net Revenue


Figure-14: MGM China Operating Expenses / Net

Operating Revenue

Figure-15: MGM China Operating Profit & Growth


98.3% 98.7%97.0%

94.0%

91.0%

80%

85%

90%

95%

100%

1,000

1,500

2,000

2,500

3,000

2013A 2014A 2015F 2016F 2017F

Average Daily Rate (L) RevPAR (L)

Occupancy (R)

HK$

21.5

25.4 25.1

17.2 15.6 7.4%

18.4%

-1.1%

-31.5%-9.6%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

-

5

10

15

20

25

30

2013A 2014A 2015F 2016F 2017F

Casino Revenue (Net) GrowthHK$ Bn

25.7 25.5 17.6 15.9 20.9

18.2%

-1.1%

-31.0%

-9.5%

19.2%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

-

5

10

15

20

25

30

2013A 2014A 2015F 2016F 2017F

Total Revenue (Net) Total Growth (R)

HK$ Bn

53.1% 51.1% 51.7% 51.6% 51.6%

14.4% 14.0% 15.3% 15.3% 13.8%

78.5% 77.3%83.7% 84.1%

88.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2013A 2014A 2015F 2016F 2017F

Gaming Taxes Staff Costs

Operating, Admin. & other D&A

Inventories Total Operating Costs

5.5 5.8

2.9 2.5 2.5

25.1%

4.1%

-50.3%

-11.7%-3.0%

-60%

-40%

-20%

0%

20%

40%

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2013A 2014A 2015F 2016F 2017F

Operating Profit Growth

HK$ Bn



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Figure-16: MGM China Profit Margins Figure-17: MGM China EBITDA


Figure-18: MGM China Net Profit


21.5%22.7%

16.3% 15.9%

11.7%

25.8%27.5% 27.9% 27.9% 27.9%

20.7%22.4%

15.7% 15.3%

11.2%

0%

5%

10%

15%

20%

25%

30%

2013A 2014A 2015F 2016F 2017F

Operating MarginAdjusted EBITDA MarginNet Profit Margin

6.4 6.7

4.7

4.2 5.6

19.9%

4.7%

-29.8%

-9.5%

31.7%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

1

2

3

4

5

6

7

2013A 2014A 2015F 2016F 2017F

Adj. EBITDA Adj. EBITDA Growth

HK$ Billion

5.3 5.7 2.8 2.4 2.3

17.7%

7.0%

-51.7%

-11.8%-3.9%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

0

1

2

3

4

5

6

2013A 2014A 2015F 2016F 2017F

Net Profit Net Profit Growth

HK$ Billion



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Financial Statements and Ratios Income Statement

Year end Dec. (HK$ mn) 2013A 2014A 2015F 2016F 2017F

Casino 25,412 25,138 17,218 15,558 20,496

Rooms 45 42 63 42 130

Food and Beverage 220 228 235 243 251

Retail and Other 50 47 48 50 51

Revenue (Net) 25,728 25,454 17,564 15,893 20,929

YoY 18.2% (1.1%) (31.0%) (9.5%) 31.7%

Gaming Tax & Premium (13,654) (13,003) (9,079) (8,203) (10,807)

Inventories (360) (387) (267) (241) (318)

Staff Costs (1,696) (1,944) (1,918) (1,735) (2,285)

Operating & Admin & Other (3,706) (3,553) (2,683) (2,428) (2,888)

D&A (768) (800) (752) (753) (2,174)

Total Operating Expenses (20,184) (19,686) (14,698) (13,361) (18,473)

Operating Profit 5,544 5,769 2,866 2,531 2,456

YoY 25.1% 4.1% (50.3%) (11.7%) (3.0%)

Interest Income 25 13 4 3 3

Finance Costs (214) (38) (98) (88) (108)

For-Ex (6) (21) (0) 0 0

Profit Before Tax 5,348 5,723 2,771 2,446 2,351

Income Tax Expense (15) (16) (16) (16) (16)

Net Profit 5,334 5,707 2,755 2,431 2,335

YoY 17.7% 7.0% (51.7%) (11.8%) (3.9%)

Basic EPS (HK$) 1.404 1.502 0.725 0.639 0.614

YoY 17.7% 7.0% (51.7%) (11.8%) (3.9%)

Diluted EPS (HK$) 1.402 1.499 0.724 0.639 0.614

YoY 17.6% 7.0% (51.7%) (11.8%) (4.0%)

Adjusted EBITDA 6,366 6,663 4,675 4,230 5,571

Balance Sheet

As at Dec. 31 (HK$ mn) 2013A 2014A 2015F 2016F 2017F

P&E & Construction 6,714 9,534 17,535 28,670 28,722

Sub-concession Premium 793 666 539 412 285

Land Use Right Premium 1,538 1,399 1,450 1,430 1,411

Other 412 320 372 424 476

Total Non-Current Assets 9,457 11,920 19,896 30,937 30,894

Inventories 99 110 123 111 146

Trade Receivables 577 428 295 267 352

Other 139 138 176 166 196

Cash & Equiv. 7,885 4,232 3,859 3,239 2,780

Total Current Assets 8,700 4,908 4,453 3,783 3,474

Total Assets 18,157 16,828 24,349 34,720 34,368

Payable & Accrued Charges 6,721 5,579 4,567 4,132 5,441

Land Use Right Payable 194 204 209 0 0

Other 58 74 76 40 45

Total Current Liabilities 6,973 5,857 4,851 4,172 5,486

Bank Borrowings 4,049 4,118 11,000 21,000 18,000

Land Use Right Payable 529 325 220 115 9

Other 32 186 466 330 555

Total Non Current Liabilities 4,611 4,629 11,686 21,445 18,564

Total Liabilities 11,584 10,486 16,537 25,617 24,051

Shareholders' Equity 6,573 6,342 7,812 9,103 10,317

BPS (HK$) 1.730 1.669 2.055 2.394 2.713



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Cash Flow Statement

Year end Dec. (HK$ mn) 2013A 2014A 2015F 2016F 2017F

Profit Before Tax 5,348 5,723 2,771 2,446 2,351

Depreciation & Amortization 768 800 752 753 2,174

Interest Expense, Net 183 18 94 85 105

Share-Based Payment Expense 34 70 0 0 0

Other Adjustments 303 14 12 12 12

Working Cap Adjust. 881 (1,424) (930) (1,056) 1,072

Tax Paid (15) (15) (24) (17) (16)

Interest Received 25 14 4 3 3

Cash from Operations 7,528 5,199 2,679 2,227 5,700

P&E (1,928) (2,509) (8,531) (11,667) (2,000)

Prepayment for Land Use Right Premium (115) (228) (50) 19 19

Other (9) (12) (4) (4) (4)

Cash from Investing (2,052) (2,748) (8,585) (11,651) (1,985)

Borrowing, Net 0 0 6,882 10,000 (3,000)

Interest Paid (196) (166) (98) (88) (108)

Dividends Paid (4,750) (5,928) (1,240) (1,094) (1,051)

Proceeds from Share Issuance, Net (26) (9) (11) (14) (17)

Cash from Financing (4,972) (6,103) 5,533 8,804 (4,175)

Net Change in Cash 503 (3,653) (373) (620) (459)

Year End Cash Equivalents 7,885 4,232 3,859 3,239 2,780

Ratios

2013A 2014A 2015F 2016F 2017F

Margins

Effective Gaming Tax Rate 53.7% 51.7% 52.7% 52.7% 52.7%

Operating Margin 21.5% 22.7% 16.3% 15.9% 11.7%

Net Profit Margin 20.7% 22.4% 15.7% 15.3% 11.2%

Adj. EBITDA Margin 25.8% 27.5% 27.9% 27.9% 27.9%

Return Ratios

ROA 32.4% 32.6% 13.4% 8.2% 6.8%

ROE 85.4% 88.4% 38.9% 28.7% 24.1%

Return on Capital Employed 54.0% 54.7% 19.6% 10.4% 8.4%

Return on Invested Capital (7.3%) 15.0% 15.4% 6.9% 5.4%

Liquidity & Leverage

Leverage (ie., Gearing) 64.9% 63.8% 155.4% 248.3% 185.4%

Net Gearing net cash net cash 100.9% 210.0% 156.7%

Interest Coverage Ratio 2927.3% 22843.7% 3044.5% 2979.5% 2344.1%

Current Ratio 124.8% 83.8% 91.8% 90.7% 63.3%


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Company Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable.

Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.

Neutral Relative Performance is -5% to 5%;

or the fundamental outlook of the company or sector is neutral.

Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell Relative Performance <-15%;

or the fundamental outlook of the company or sector is unfavorable.

Sector Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable.

Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral.

Underperform Relative Performance <-5%;

or the fundamental outlook of the sector is unfavorable.

DISCLOSURE OF INTERESTS

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for SMI Holdings Group Limited (00198), China Fire Safety Enterprise Group Limited (00445), Guangshen Railway Company

Limited-H shares (00525), China All Access (Holdings) Limited (00633), Guotai Junan International Holdings Limited (01788) and Binhai Investment Company Limited (02886), Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report.

(4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.

DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services and etc. (for example, the placing agent, lead manager, s ponsor,

underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales

persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and

mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its r elated risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

© 2015 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong.

Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk

Documents

2Q15 Adjusted EBITDA In-line with our Forecast, Maintain ...pg.jrj.com.cn/acc/Res/HK_RES/STOCK/2015/8/27/a82ef017-7cb4-4930-a… · 君安研究 a 设美高梅路氹在 梅中国

2Q15 Adjusted EBITDA In-line with our Forecast, Maintain ...pg.jrj.com.cn/acc/Res/HK_RES/STOCK/2015/8/27/a82ef017-7cb4-4930-a… · 君安研究 a 设美高梅路氹在梅中国