MGM China's Strong 2023 Recovery Leads That of Macao Peers, DPS a Positive Surprise

As one of six casino license holders 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 neighboring Guangdong province, where only 8% of China’s 1.4 billion population resides, the penetration rate is merely 1%. New hotel rooms by major operators in the next few years should accommodate increased and extended visits from bigger spenders from the 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, the new Hengqin border, and the Gongbei-to-Hengqin extension rail, Macao's carrying capacity for tourists should increase. In addition, neighboring Hengqin Island, 3 times the size of Macao, is under rapid development to complement Macao's growth.