MGM China will maintain a technological advantage over its Macau peers throughout the remainder of this year and possibly into 2025 due to its early adoption of smart gaming tables, according to Citibank.
Publishing its 1Q24 results preview on Thursday, the financial services giant also named MGM as its new top pick in Macau and raised its target price on MGM China shares from HK$16 to HK$17 on the expectation it will continue to claim market share.
Citibank also expects MGM, and to a lesser extent SJM Resorts, to be the two companies outperforming in 1Q24 when it comes to quarter-on-quarter EBITDA improvements – even after the former set an all-time record Adjusted Property EBITDAR record in the December 2023 quarter.
And it doesn’t expect that trend to change anytime soon.
“By being an early adopter of smart gaming tables and becoming more aggressive on its player marketing efforts, MGM China has been successful in gaining market share in 2023 and 2024 to date,” wrote Citi analysts George Choi and Ryan Cheung.
“We believe the merits from the use of smart gaming tables and RFID chips is real and based on the estimated smart gaming table rollout timeline by its competitors, it looks like MGM China will enjoy this technological advantage over its competitors for most of 2024, if not extended into 2025.
“We therefore now rank MGM China our top pick in Macau.”
Industry-wide, Citi said it expects Macau’s 1Q24 EBITDA to grow by 2% quarter-on-quarter in 1Q24 – below GGR growth of 6% due to negative operating leverage caused by unfavorable hold, particularly in the month of February.
SJM is expected to buck that trend due to the continued ramp of Grand Lisboa Palace, which finally turned profitable towards the end of 2023.
