MGM China's earnings jumped 10% to HKD1,603m

Thanks to these growth drivers.

According to Maybank Kim Eng, MGM's net revenue for 2Q13 increased by 18% YoY to HKD6,481m, while at the same time recording its highest ever quarterly EBITDA of HKD1,603m, a 10% increase YoY. This was driven by exceptional performance from both the mass market and VIP segments. 

MGM also announced an interim dividend of USD113 million, which will be paid to shareholders as of Aug 26, 2013.

Here's more:

Implication: MGM’s 2Q13 EBITDA were 2% slightly higher than Bloomberg consensus of HKD1,571m. This was mainly driven by mass market floor wins which increased by a whopping 29% YoY, despite an aggregate table game drop that was up by only 11% YoY.

This was primarily attributed to a higher win rate of 35.3% versus 30.4% the last quarter.

VIP rolling chip turnover also soared 34% YoY for 2Q13, against a lower hold percentage of 2.9% in 2Q13 versus to 3.3% in 3Q12. Despite the low win rates, MGM’s VIP segment’s win grew by 20% YoY, as capacity expands in its newly renovated 2nd floor VIP gaming area that was completed in 4Q12.

As a result EBITDA margins fell 1.8ppts YoY to 24.7% as a result of a mix shift towards less profitable VIP segment. According to our channel checks, 2Q13 market share for MGM came in at 10.5% up 1.05ppts YoY.

Action: MGM trades at 13x/12x of FY13/14 EV/EBITDA which is marginally higher than sector average of 12x, as the market prices in forward yield of 4% and higher growth against other peninsular operators.

Management stated during the conference call that MGM Cotai is slightly ahead of schedule with excavation completed. MGM Cotai will include a large scale atrium three times the size of Las Vegas's Bellagio.