美高梅中国(2282.HK):营收&利润均超预期 博收恢复持续领先行业

MGM China (2282.HK): Revenue & Profit Exceed Expectations, Boshou Recovers and Continues to Lead the Industry

Key points of investment

4Q23 revenue & profit both exceeded expectations. On the revenue side, 4Q23 achieved total revenue of HK$7.68 billion (our forecast is HK$6.27 billion), recovering to 134.9% in 4Q19. Among them, net gaming revenue of HK$6.63 billion recovered to 130.5% in 4Q19; net non-gaming revenue of HK$1.04 billion recovered to 159.1% in 4Q19. On the profit side, 4Q23 achieved adjusted property EBITDA of HK$2.19 billion (our forecast is HK$1.62 billion), recovering to 140.6% in 4Q19, driving the company's adjusted property EBITDA margin of 1.1 pct to 28.5% from 27.4% in 4Q19. However, at the same time, the company's EBITDA profit margin fell 1.1 pct month-on-month. We estimate that the company's average daily operating expenses increased by about 20% month-on-month. Looking ahead to 2024, we still believe that the company's EBITDA profit margin will remain high at 27-30%. The main reason is that the company's gaming business structure will further shift to a high-margin midfield business, but at the same time, an increase in employee remuneration of 3-4% will lead to an increase in the company's average daily operating expenses.

4Q23 The company achieved gross revenue of HK$8.50 billion, recovering to 125.1% in the same period in 2019. VIP/midfielders (including slots) achieved revenue of HK$1,12/7.38 billion respectively, recovering to 49.4%/163.1% in 4Q19, leading the industry by about 26pct/59pct respectively, driving the company's overall market share to increase 6.6pct from 9.7% in 4Q19 to 16.3% in 4Q23. At the same time, against the backdrop of the increase in the release of new properties by the remaining companies, the company's closing market share remained high at 15.1% for the whole of 2023 (the number of the company's gambling tables accounted for 12.5% of the total number of tables in the industry). We believe that the company's operating efficiency was outstanding. The average daily bet amount for 4Q23 MGM Macau/MGM MGM Cotai midfield single table was 104.0%/121.8% for the same period in '19, respectively. At the same time, management pointed out that since 2024, the company's operating performance has remained impressive. The adjusted property EBITDA and market share in January all exceeded the level of the peak season in October 2023; moreover, the number of visitors, guests and midfield bets during the Spring Festival all far exceeded the same period in 2019.

4Q23 The Company achieved non-gaming revenue of HK$1.04 billion, which recovered to 159.1% in the same period in 2019.

The company's non-gaming revenue accounts for 13.5% of total revenue, which is relatively low, but we expect the company to increase investment in non-gaming businesses and actively host non-gaming events such as concerts and food festivals. Since 2024, the company has successfully hosted concerts by domestic and foreign stars such as Bruno Mars, Huang Liling, and Lin Zixiang, attracting a large number of visitors to the company's properties. While increasing the company's non-gaming business revenue, it also has a certain effect on the company's gaming business.

Profit forecast and investment rating: We raised our 2023-2025 net revenue forecast to HK$242.0/267.7/HK$28.42 billion, raised the company's 2023-2025 adjusted property EBITDA forecast to HK$71.3/81.3/8.76 billion, and the current stock price corresponds to 10.0/8.8/8.1 times EV/adjusted property EBITDA. Our target price is HK$16.8, maintaining a “buy” rating.

Risk warning: China's macroeconomic growth falls short of expectations, Macau's tourism recovery falls short of expectations, the overseas gaming market is being diverted, and Macau's gaming regulations are getting stricter.

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