Why did third-quarter profit appear resilient?

  • In the third quarter of 2026, MGM China’s property EBITDA was HK$2.395 billion, up 3% quarter on quarter and 1% year on year. It was slightly above Goldman Sachs’ forecast and near the upper end of Bloomberg consensus expectations of HK$2.2 billion to HK$2.4 billion.
  • The VIP win rate rose from 2.8% in the second quarter to 4.1%, boosting profit for the quarter. Adjusted to a theoretical win rate, property EBITDA was approximately HK$2.269 billion, down 6% quarter on quarter and flat year on year; this included HK$7 million contributed by the newly acquired China hotel management business.
  • Corporate EBITDA was HK$2.059 billion, down 7% year on year, mainly because royalties paid to the parent company have increased since the beginning of the year. The fee was HK$320 million in the third quarter, compared with HK$148 million a year earlier.

Which businesses offset VIP weakness?

  • Third-quarter VIP rolling chip volume fell 16% quarter on quarter, while mass table gaming revenue fell 2%. The latter’s win rate rose from 27.2% in the second quarter to 27.7%, supporting revenue.
  • Slot machine gaming revenue rose 28% quarter on quarter, including growth of 42% at MGM Cotai, which benefited from a premium slot area opened in July. The company’s overall gaming revenue market share rose 0.4 percentage points quarter on quarter to 17.1%, while its combined mass table and slot share rose 0.8 percentage points to 17.6%.
  • Performance differed at the two properties: MGM Macau’s VIP rolling chip volume fell 40% quarter on quarter, but mass table and slot gaming revenue rose 6% and 9%, respectively, and win-rate-adjusted EBITDA rose 3% quarter on quarter. At MGM Cotai, both mass table revenue and VIP rolling chip volume fell 7%, while adjusted EBITDA fell 11%.

What signals did recent demand send?

  • During Golden Week, the company’s overall gaming revenue fell 4% year on year, outperforming the industry’s decline of approximately 10%. Visits rose approximately 8% year on year, and mass-market gaming revenue grew 5%. Management said the number of premium mass customers in its database and the number of players continued to grow at high single-digit rates year on year.
  • VIP business weakened somewhat after Golden Week, however. The report said Macau’s industry-wide average daily gaming revenue over the preceding two weeks was approximately 600 million patacas, below the more than 700 million patacas recorded a year earlier. If the daily average reaches 620 million patacas for the remainder of October, Goldman estimates full-month gaming revenue at 21.4 billion patacas, down 11% year on year.

Why did Goldman cut its target price while maintaining a buy rating?

  • Citing the recent weakening trend in gaming revenue, Goldman cut its EBITDA forecasts for 2026 through 2028 by 2% to 6% and lowered its 12-month target price from HK$16 to HK$15.40, while maintaining its buy rating. The report listed the share price at HK$8.95.
  • The bank said the company’s recent market share was close to 17% and that its operating performance provided support. IAC’s withdrawal of its acquisition proposal for parent company MGM Resorts could also remove pressure on the share price arising from a change in control of the parent. Goldman calculated an enterprise value-to-EBITDA ratio of approximately 6 times based on its 2026 forecast.
  • On the financial side, net debt at the end of the third quarter fell 6% quarter on quarter to US$1.723 billion, equivalent to 1.5 times EBITDA for the past 12 months. The company’s approximately HK$1.2 billion contribution to a government guidance fund will be paid over the next three years. Goldman believes annual free cash flow of approximately HK$4 billion to HK$6 billion is sufficient to cover it.