Financial Services Association, May 3 (Editor: Hu Jiarong) Hong Kong gaming stocks have strengthened once again, benefiting from the May 1st holiday travel craze. As of press release, MGM China (02282.HK), Sands China (01928.HK), Galaxy Entertainment (00027.HK), and Wynn Macau (01128.HK) were up 7.33%, 4.15%, 3.87%, and 3.32% respectively.

In terms of news, the Macau Tourism Board released news today that with the arrival of the May 1st Labor Day holiday, the enthusiasm of visitors to Macao continues to rise. According to the latest data released by the Macau Public Security Police, on May 2, Macau received nearly 300,000 visitors, including 150,000 inbound visitors, 74,000 visitors entering through the border gates, and 144,000 outbound visitors.

In addition, the Macau Gaming Inspection and Coordination Bureau also released the gaming industry revenue data for April on Wednesday, showing a 26% year-on-year increase in total revenue to MOP 18.5 billion. This figure exceeded the market's previous expectations.

The State Administration of Immigration recently announced six new immigration management policies and measures for convenience enterprises. These measures will officially take effect from May 6. Among them, the newly introduced Hengqin to Macau group travel visa policy allows tour groups to travel between Hengqin and Macau multiple times within 7 days in a “group entry and exit” manner, which will speed up visa processing and help reduce logistics frictions. At the same time, the new policy also includes extending the period of stay for business endorsements to Hong Kong and Macau to 14 days.

According to UBS, the new visa arrangement is positive for Macau, which is conducive to extending the length of stay for visitors and visitors to Macao and reducing logistics friction. It is expected that the “Qin and Macau Travel” visa will bring additional visitors.

Boosted by this news, most gaming companies related to Macau travel strengthened.

MGM International's EBITDA margin exceeded expectations

At one point, MGM China rose nearly 8% in the intraday market, leading the way for gaming stocks.

In terms of news, MGM International recently announced its financial results for the three months ending December 31, 2024, with significant growth in some key financial indicators. It is particularly noteworthy that the integrated resorts operated by the company in Macau performed well. Its adjusted property EBITDAR (profit before tax, interest, depreciation and amortization) reached US$301 million, an increase of 78% over the same period last year, and a 15% increase compared to the previous quarter's US$262 million, a new record.

At the same time, MGM China's parent company, MGM International Hotels Group, also disclosed its performance. Among them, adjusted property EBITDA for the same period was 1.2 billion US dollars, and total revenue was 4.4 billion US dollars.

For the adjusted property EBITDAR mentioned above, this is a financial measure of profitability before taking into account interest and other non-operating income (expenses), taxes, depreciation and amortization, pre-opening and start-up expenses, net property transactions, net income from real estate investment trust (REIT) transactions, rent expenses associated with triple net leases and land leases, and income from unconsolidated affiliated companies that invest in real estate companies.

In response, Citibank released a research report today stating that it maintains MGM China's “buy” rating and raised its target price from HK$17 to HK$18.35, taking into account the company's latest business trends. The company's quarterly record was not surprising, but I was pleasantly surprised by its EBITDA margin of 30.3%, compared to the bank's earlier estimate of 29.4%.