MGM China Holdings posted a 33% increase in operating profit in the first quarter as revenue from the Macau resort’s high-margin cash tables grew a hefty 45%.
Earnings before interest, taxes, depreciation and amortization, the industry’s principal indicator of profitability, rose to US$257 million from $193 million in the 2013 quarter on net gaming revenue that was up 26% to $941 million.
Despite the increases, the EBITDA total missed the median estimate of $258.5 million from six analysts polled by Bloomberg News, and that has raised some concern among investors. Shares of MGM China (HKSE: 2282) fell 3.9% on the earnings announcement and are down 18% this year.
“With limited room inventory and premium mass success in the bag, the company might be running short of new ideas to keep its market share stable,” Morgan Stanley’s Praveen Choudhary wrote in a client note earlier this month.
VIP revenue rose 12% in the quarter, in line with the market, which saw revenue growth from the rolling chip slot taper off for the first time in five months to +12.5%, a factor observers attribute to a general slowing of the mainland China economy.
Total gambling revenue in Macau, the only place in the country where casinos are legal, is up 20% through the first three months of the year.
MGM China is 51% owned by Las Vegas-based MGM Resorts International. Pansy Ho, a daughter of Macau casino tycoon Stanley Ho and Hong Kong’s richest woman, owns 27%.
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