20171130-交银国际证券-美高梅中国-02282.HK-Better_late_than_never_5页_919kb

报告摘要

MGM China (2282 HK) Summary

Core Content

MGM China is a 51% owned subsidiary of MGM Resorts, operating in the Macau gaming sector. The company has only one casino, MGM Macau, on the Macau Peninsula and is ranked sixth in gaming revenue. It plans to open MGM Cotai, a new casino, in January 2018. The stock's last closing price was HK$20.15, with an upside of -3.2% and a target price of HK$19.50.

Financial Highlights (Y/E 31 Dec)

Metric	2015	2016	2017E	2018E	2019E
Revenue (HK$ m)	21,336	17,879	17,690	22,982	26,815
YoY growth (%)	-36.0	-16.2	-1.1	29.9	16.7
Net profit (HK$ m)	3,113	3,037	2,495	1,564	3,431
EPS (HK$)	0.82	0.80	0.66	0.41	0.90
EPS growth (%)	-45.3	-2.4	-17.9	-37.3	119.4
P/E (x)	24.6	25.2	30.7	49.0	22.3
P/B (x)	15.6	10.6	8.8	8.6	7.0
Dividend yield (%)	1.2	1.4	1.6	1.7	2.0

Key Financial Insights

Revenue Growth: Revenue declined in 2015 and 2016, with a slight decrease in 2017, but showed strong growth in 2018 and 2019.
Net Profit: Net profit slightly decreased in 2016, significantly dropped in 2017, and then increased in 2018 and 2019.
EPS Growth: EPS declined in 2015 and 2016, dropped further in 2017, and showed a sharp decline in 2018, but increased significantly in 2019.
Valuation Metrics: P/E ratio increased from 2015 to 2017 but dropped sharply in 2018. P/B ratio also decreased over the years, indicating a decline in asset value relative to equity.

EBITDA and Earnings Revisions

EBITDA (HK$ m)	Old Estimate	New Estimate	% Change
2017E	4,647	4,060	-13.0
2018E	5,485	5,970	+8.84
2019E	6,831	7,163	+4.86

EBITDA Growth: EBITDA growth was negative in 2017 but improved in 2018 and 2019.
EPS Revisions: The analyst revised the EPS estimates downward for 2017 and 2018 but upward for 2019.

Earnings and Performance

EBITDA Margin: EBITDA margin increased from 20.0% in 2015 to 26.7% in 2019.
Net Margin: Net margin decreased from 14.6% in 2015 to 6.8% in 2018, then increased to 12.8% in 2019.
ROE: ROE decreased from 33.0% in 2015 to 11.2% in 2018, then increased to 23.3% in 2019.
ROA: ROA also showed a decline in 2018, but increased in 2019.

Valuation Metrics

EV/EBITDA: The EV/EBITDA ratio decreased from 19.5x in 2015 to 14.0x in 2018, then further dropped to 11.2x in 2019.
P/E: P/E ratio increased from 24.6x in 2015 to 30.7x in 2017, then rose sharply to 49.0x in 2018 before decreasing to 22.3x in 2019.
P/B: P/B ratio decreased over the years, indicating a decline in the market's valuation of the company's assets relative to its equity.

Key Concerns

Cannibalization Risk: The upcoming MGM Cotai may cannibalize revenue from the existing MGM Macau due to similar "theater-theme" and Mass market focus.
VIP Contribution: The new VIP program, The Mansion, may take time to ramp up, and management expects minimal VIP contribution from MGM Cotai initially.
Market Expectations: Due to the previous hiccup at the debut of Wynn Palace and The Parisian, investors may have scaled back their expectations for new casinos.

Analyst Ratings

Stock Rating: The analyst maintains a Neutral rating for MGM China, with a revised target price of HK$19.50.
Trading Rating: The analyst does not provide a trading rating, but the stock's total return is expected to be in line with the industry over the next 12 months.

Company Background

Operations: MGM China operates one casino, MGM Macau, and is set to open MGM Cotai in January 2018.
Market Position: It is ranked sixth in gaming revenue in Macau.
Ownership: It is a 51% owned subsidiary of MGM Resorts.

Key Figures

Market Cap: HK$76,571 million
Issued Shares: 3,800 million
Average Daily Volume: 5.97 million
1-Month Change: 18.11%
YTD Change: 25.31%
50-Day MA: HK$18.32
200-Day MA: HK$16.74
14-Day RSI: 62.89

Analyst Information

Analyst: Alfred Lau, CFA, FRM
Contact: alfred.lau@bocomgroup.com, (852) 3766 1807

Research Team

Head of Research: Hao HONG, CFA
Deputy Head of Research: Geoffrey CHENG, CFA
Other Analysts: Karen TAN, Grace HUA, Jennifer ZHANG, Summer WANG, Wallace CHENG, Chris YIM, etc.

Analyst Certification

The authors of the report declare that their views reflect their personal opinions and that their compensation is not related to the recommendations.
They confirm they have not traded in the stock covered in the report within 30 days prior to its issue.

Disclosure of Business Relationships

BOCOM International has investment banking relationships with several companies.
Some subsidiaries of BOCOM International hold equity in companies mentioned in the report.

Disclaimer

The report is confidential and for private circulation only.
The information is based on data believed to be correct at the time of issue.
The report does not constitute an offer or recommendation to buy or sell securities.
The views may change without notice, and the company does not guarantee the accuracy or completeness of the information.

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