Macau gains, Osaka growth prospects underpin MGM Resorts outlook: analysts

MGM Resorts International’s business in Macau is helping cushion weakness in its U.S. operations, while its casino resort being developed in Osaka, Japan, remains a source of longer-term growth, according to analyst reports issued following the group’s third-quarter results. The memos also highlighted pressure on Macau margins from higher player-reinvestment costs and operating costs, alongside substantial equity contributions still required for the Japan integrated resort (IR). The Macau unit, MGM China Holdings Ltd, achieved a record 17.1 percent share of Macau’s casino gross gaming revenue (GGR) in the third quarter, according to JP Morgan and Texas Capital Securities. The latter said the operator’s share reached 19.2 percent in September, although favourable gaming hold had contributed to the quarterly performance. “While the third quarter of 2026 share partially benefited from high hold (luck factor), MGM market share momentum clearly continues, in our view,” wrote Texas Capital in a Thursday note. The brokerage said MGM China provided a buffer against softer U.S. operating trends, supported by access to Greater China’s premium-mass customers and a customer base distinct from that of the group’s U.S. properties. MGM China’s quarterly net revenue rose approximately 5 percent year-on-year to US$1.14 billion. Adjusted property earnings before interest, taxation, depreciation, amortisation and rent (EBITDAR), as reported by its U.S. parent, fell 7 percent from a year earlier, to US$264 million. In Macau, the MGM group runs the MGM Macau resort on Macau peninsula, and MGM Cotai in the city’s Cotai district. Texas Capital said increased promotional spending during the reporting period contributed to a slight sequential margin contraction, while the larger year-on-year margin impact reflected an adjustment to licence fees payable to MGM Resorts. Seaport Research Partners noted that MGM China’s property EBITDA, before licence fees, increased 0.6 percent year-on-year. On a VIP hold-adjusted basis, that measure rose 4.7 percent, although the brokerage also mentioned favourable mass-market hold. The brokerage said visitor volumes to MGM China’s two properties increased 10 percent year-on-year during October’s Golden Week holiday season. It estimated the operator’s October GGR share was in the low-17-percent range, but forecast a moderation to around 16 percent in 2027 amid competition. Net leverage, investment CreditSights estimated in a Thursday report that MGM China generated positive free cash flow of between US$230 million and US$240 million in the third quarter, supported by lower capital expenditure and improved property EBITDA. The research firm said the operator’s net leverage had declined to 1.36 times trailing 12-month EBITDA, from 1.44 times at the end of June, and expected free cash flow to remain positive in the fourth quarter The casino group also provided commentary on the under-construction casino resort in Osaka, Japan. Speaking on Wednesday during MGM Resorts’ call to discuss the third-quarter earnings, chief executive and president Bill Hornbuckle said the JPY1.51-trillion (US$9.56-billion) MGM Osaka was approximately 11 percent complete and “remained on schedule and on budget” for a 2030 opening. Also on the call, Jonathan Halkyard, MGM Resorts’ chief financial officer, said the company had spent about JPY114 billion on the project to date. The group expected to contribute a further JPY150 billion to JPY160 billion – approximately US$1 billion – in each of 2027 and 2028, completing its funding commitments, the CFO added. JP Morgan said in a Thursday memo that the Japan project offered considerable longer-term value, but its opening remained beyond the investment horizon of many public-equity investors. Seaport similarly said it recognised long-term value in the Japan casino resort, although it currently attributed no value to the project in its MGM Resorts valuation. CBRE Equity Research also identified MGM Osaka among the group’s sources of substantial long-term growth, alongside the gaming group’s digital businesses, as attention returned to operating fundamentals following the withdrawal of People Inc’s acquisition proposal.