MGM Resorts Earnings: Macau Demand Ramping Ahead of Expectations With a Japan Resort on the Horizon

We think MGM Resorts investors have a lot to cheer about, led by a demand recovery in Macau and a Japan resort on the horizon (with a planned 2030 opening). MGM Resorts' Macau gaming revenue and EBITDAR recovered to 78% and 88% of 2019’s level, respectively. Gaming revenue outpaced the nearly 50% rebound in industry gross gaming revenue in the period, as the company is benefitting from a recent increase in table allocation, remodeling and renovation of its gaming floors and suite product, efforts to utilize data analytics, and the temporary effect of some peer room supply remaining offline. We think MGM will be able to hold some of its recent share gains and plan to lift our 2023 Macau sales growth forecast to 140% from 115%. We also plan to lift our 2023 Macau EBITDAR margin estimate to the mid-20s from 19%, as cost efficiencies and mix shift to higher margin mass play and VIP direct bets prove stronger than our previous prognosis.