MGM China Stock Takes a Hit as MGM Cotai Opening Delayed Again

Posted on: January 27, 2018, 02:00h. 

Last updated on: January 26, 2018, 04:07h.

MGM Cotai will not open in Macau on January 29, as scheduled, MGM China announced on Thursday. The news that the operator was pushing the date back to sometime “within the month of February” caused its stock to slip by 7 percent on the Hong Kong Stock Exchange.

MGM Cotai opening delayed until February
The MGM Cotai has been delayed again, this time for administrative reasons. The $3.45 billion property, initially scheduled to open in 2016, will miss its latest target of January 29. (Image: MGM China)

According to the South China Morning Post, invitations to the grand opening party had already been sent out.

It’s the fourth time the company, a joint venture between Pansy Ho and US casino giant MGM Resorts, has pushed back the launch date of the $3.45 billion integrated resort. It was originally expected to open in 2016, then in the first half of 2017, then the second half of 2017, only to be delayed by damage caused by Typhoon Hato, and bumped to the end of this month.

MGM China Budget on Track

The latest delay is due not to an act of God but to administrative reasons, the company explained in a securities exchange filing.

“The company is going through the administrative approval process of obtaining relevant licences to operate MGM Cotai,” it said. “As a result, it is now expected that the public opening date of MGM Cotai will be within the month of February 2018.”

In a separate press statement, MGM China said: “We are working closely with the Macau government to bring to our community and to the public a long-awaited world-class resort that takes diversified consumer experiences to a new height and that thousands of our employees feel deeply proud of.”

The company also moved to reassure investors that, despite the delay, the overall budget of the project would remain unchanged.

Table Scraps

On Wednesday, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, announced MGM Cotai would be awarded 100 live gaming tables on its opening, plus additional 25 more at the beginning of 2019.

Macau has run a cap on table allocation since 2013 at the behest of the Chinese government, but the quota is likely to disappoint the operator, especially considering that recent entrants to the market, the Parisian Macao and Wynn Palace, were allocated 150.

Japanese brokerage Nomura was putting a positive spin on it in a note on Wednesday, however.

We believe limited growth in tables is positive (for both MGM and the overall market), as the supply of tables is relatively static, so there becomes a scarcity value attached to them, which should benefit those operators with the best properties, including MGM,” it said.

MGM China will also be permitted to bring in 77 gaming tables from its downtown property, MGM Macau, and Union Gaming Securities Asia Ltd’s analyst Grant Govertsen told GGRAsia he believes the table quota will be enough to “achieve current revenue and cash flow forecasts for the company.”