MGM China reported 4Q23 net revenue of HK$7.7bn and adjusted Ebitda of HK$2.2bn, higher than our expectation, thanks to better-than-expected market share gain. Adjusted EBITDA turnaround from 2022 to historical high of HK$7.2bn in 2023, representing 17% increase of 2019 level. The company had market share of 15.2% for 2023, up from 9.5% in 2019. We raise EPS forecast from HK$0.69 to HK$0.96 (+33% YoY) in 24E, from HK$0.83 to HK$1.06 (+10% YoY) in 25E, and introduce 26E forecast of HK$1.15 (+9% YoY). We raise target price from HK$13 to HK15.4. With 20.3% upside potential, we maintain Buy rating.
4Q23 results. The company's total gross gaming revenue (GGR) increased 307% YoY and 23% QoQ, representing 25% increase over 2019 level. Mass GGR surpassed 4Q19 by 74%, slot GGR surpassed 4Q19 by 25%, and VIP GGR recovered to 49% of 4Q19 level. Total Ebitda exceeded 4Q19 by 41%, in which MGM Cotai exceeded 4Q19 by 113% and MGM Macau recovered 90% of 4Q19 level.
Strong Chinese New Year visitor volume. According to the provisional figures from the Macau Government Tourism Office (MGTO), during the eight-day holiday, the total number of tourists to Macau reached over 1.35m, +13% over 2019 level, and the daily average number of tourists reached over 169k, recovering to 99% of 2019 level, higher than MGTO's previous forecast of 120k per day.
Maintain Buy. We raise target price from HK$13 to HK15.4. With 20.3% upside potential, we maintain Buy rating.
Risks: Lower-than-expected revenue recovery.