MGM China Announces Special Dividend of HK$0.353 Per Share, Allocating HK$1.34 Billion

MGM China, a major gaming operator in Macau, has announced a special dividend payment of HK$0.353 per share to its shareholders. According to a filing made on Thursday, the Hong Kong-listed company revealed that it plans to allocate just over HK$1.34 billion ($172 million) for this dividend, with the payment scheduled to be made on October 4th.

The decision to declare this special dividend came after the board of MGM China assessed the group’s current financial position, available cash flow, future capital requirements, and other relevant factors. The company assured that, even after distributing the special dividend, it will have "sufficient resources to support its operations and business development," as well as to "fulfill its investment commitments" to the Macau government under its gaming concession.

JP Morgan analysts noted that the special dividend represents a 50 percent payout, which is consistent with the previous year’s distribution. If annualized, this 50 percent payout suggests a 6.8 percent dividend yield for the fiscal year 2024, which is the highest in Macau and globally among all the listed casino companies covered by JP Morgan.

Currently, only three gaming operators in Macau are distributing dividends this year: MGM China, Galaxy, and Wynn. JP Morgan also anticipates that Sands China will resume its dividend payments next year, likely in the second half, coinciding with its interim results.

Furthermore, Morgan Stanley analysts believe that the announcement of this special dividend will provide support for MGM China’s stock. They pointed out that "Macau gaming stocks have underperformed the Hang Seng Index by 33 percentage points year-to-date, despite trading at 9-17 percent FCFE yield."

Morgan Stanley suggested that this underperformance might be due to "slower GGR growth momentum, potential regulatory clampdowns, and the high FCFE yield not translating into dividends."

By fLEXI tEAM