Lowering Uncertainty Rating for MGM China to High on Improved Demand Visibility

As one of six casino licenseholders in Macao, MGM China benefits from insatiable Chinese demand for gaming, underpinned by rising per capita disposable income in China. Macao has a penetration rate of less than 2%, compared with Las Vegas’ 13%. Excluding the neighboring Guangdong province, where only 8% of China’s 1.4 billion population resides, the penetration rate is merely 1%. The new hotel rooms by major operators in the next few years should accommodate increased and extended visits from bigger spenders from these provinces, and drive the top line for integrated resort operators like MGM China. With the gradual ramp-up of traffic allowed on the Hong Kong-Zhuhai-Macao bridge, new Hengqin border and the Gongbei to Hengqin extension rail, Macao's carrying capacity for tourists would increase. In addition, neighboring Hengqin Island, three times the size of Macao, is under rapid development to complement Macao's growth.