MGM China Holdings (MCHVF – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Andrew Lee, CFA from Jefferies upgraded the rating on the stock to a Buy and gave it a HK$15.30 price target.
Andrew Lee, CFA has given his Buy rating due to a combination of factors including record-breaking quarterly earnings that surpassed consensus estimates and an impressive gain in market share for MGM China Holdings. The momentum is not just limited to a single quarter; the company has shown continued strength into 2024, particularly during the Chinese New Year period which has shown higher gaming operations compared to 2019. Despite macroeconomic concerns in China, the sector’s fundamentals appear to be robust, exceeding initial forecasts. Lee notes that MGM China is trading below its mid-cycle standard deviation in terms of EV/EBITDA, while concurrently increasing its market share, which supports the upgrade to a Buy rating.
Additionally, the strong performance of MGM China’s properties, particularly MGM Cotai, has been a key driver of the positive outlook. MGM Cotai’s adjusted EBITDA saw a significant quarter-over-quarter increase, reaching a new quarterly high. The company’s market share has also reached historic levels, and early indicators from the Chinese New Year period suggest that visitation numbers are higher than anticipated, pointing towards a favorable consumer sentiment and market environment. These factors, in tandem with the stock’s valuation trading below the mid-cycle EV/EBITDA, have led Andrew Lee, CFA to advocate for a Buy rating, indicating a positive long-term potential for the company’s financial performance and stock price.
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MGM China Holdings (MCHVF) Company Description:
MGM China Holdings Ltd. is an investment company, which engages in the development and operation of gaming and lodging resorts. The company involves in owning and management of casino, hotel, food and beverage, and retail operations. Its properties include MGM Macau and MGM Cotai. The company was founded on July 2, 2010 and is headquartered in Macau.
