Macau casino operator MGM China Holdings Ltd in likelihood maintained positive free cash flow in the three months to June 30, with leverage metrics stronger than the pre-pandemic year of 2019, says CreditSights Inc in a Thursday memo. Its commentary followed the gaming group’s second-quarter results on Wednesday.
MGM China’s total debt as of June this year had been pared to US$2.8 billion, down from US$3.0 billion at the end of March, wrote CreditSights analysts Nicholas Chen and David Bussey.
The debt reduction was achieved amid MGM China drawing down in the second quarter a new five-year HKD23.40-billion (US$3.02-billion) revolving credit facility. That was in order to refinance an existing US$527-million credit facility, and partially to refinance a US$500-million, 5.25-percent interest, 2025 bond, with balance-amount outstanding repaid using internal liquidity, the CreditSights team noted.
MGM China’s second-quarter adjusted earnings before interest, taxation, depreciation, amortisation and rent reached US$301.3 million, up 2.5 percent year-on-year.
“Coupled with the stronger EBITDA generated in the second quarter, MGM China’s gross and net leverage metrics…improved to 2.4x and 1.8x as of June 2025, respectively,” noted CreditSights.
The gross leverage is measured by dividing the company’s total debt by last-twelve-months (LTM) EBITDA. The net leverage figure is calculated by dividing the company’s net debt by LTM EBITDA.
The gross and net leverage metrics of MGM China in 2019 had been 2.7x and 2.2x, respectively.
That made MGM China an operator with leverage metrics stronger than the pre-Covid trading year of 2019, when compared to Macau peers, the CreditSights analysts noted.
They also estimated that MGM China’s free cash flow had remained positive in the second quarter, despite higher capital expenditure (capex).
“MGM China incurred US$52 million of capex in second quarter (+110 percent year-on-year; includes concession-related capex),” wrote CreditSights.
The institution added: “While the company did not provide a breakdown of its cash flow figures, we expect its free cash flow to have remained positive in the second quarter (estimated at circa US$200 million),” suggested CreditSights.
Its analysts expect MGM China might see “marginal topline and EBITDA improvement” in the third quarter this year, from new villa accommodation at MGM Macau, and thanks to a new high-end gaming area called “Alpha Club” opening at the same property.
“Looking ahead, we expect MGM China’s top line [numbers] and EBITDA to post marginal year-on-year improvements in the third quarter,” said the institution.
New villas, Alpha Club
This was thanks to “the completion of the remaining 18 new villas,” MGM China was converting “from former VIP junket areas,” and “made available as of July,” and the official opening of Alpha Club at MGM Macau “ahead of the October Golden Week,” which CreditSights described as “an ultra-high end offering with 20 tables, soft launched in July”. A Chinese mainland holiday encompassing China’s National Day on October 1, is usually a peak period for Chinese tourism.
The CreditSights team further noted: “The conversion of standard rooms into 63 new suites at MGM Cotai – expected to complete by first quarter of 2026 – is also likely to provide a slight boost to MGM China’s top line and EBITDA margin in early fiscal year 2026.”
Nonetheless, MGM China might, in the second half this year, “lose some market share” to its “larger-capacity” rivals in the Macau market, remarked Seaport Research Partners in a Thursday memo.
The institution noted: “MGM [is] to face stronger marketing efforts by some competitors and new capacity coming online and ramping up.
“This has been especially pronounced in Cotai, where MGM player reinvestment in mass increased over 300 basis points quarter-on-quarter and year-on-year (as percentage of mass tables gross gaming revenue).”
Nonetheless, while MGM China might lose some market share in the coming year, such level of market share should still remain “significantly above 2019 levels”, suggested Seaport.
MGM China’s gaming revenue market share in the second quarter reached 16.6 percent, well above its market share at 9.5 percent in 2019. The firm’s management expected to achieve a mid-teens percentage of market share going forward, mentioned investment analysts citing management commentary.
