stocK watch 69
Stock Performance for Macau Casino Operators (1 month)
Sources: NaSDaQ, NYSE, HKSE, Google Finance
Stock Performance for Macau Casino Operators (3 months)
Sources: NaSDaQ, NYSE, HKSE, Google Finance
companies [LVS, Wynn and MGM] with downgraded MGM’s shares to “hold” rely heavily on the ability of our resorts
heavy investments on the Las Vegas Strip from “buy”. to generate operating cash flow to repay
and elsewhere.’’ On March 17, MGM said it won a debt financing, fund maintenance capital
two-month reprieve from banks to come expenditures and provide excess cash for
MGM – debts and doubts up with a debt restructure plan. Accord- future development,’’ the company said.
ing to the company, banks granted cove- MGM, which announced a US$1.15
MGM (NYSE:MGM) said it had nant waivers on a US$7 billion bank-loan billion loss in the fourth quarter of last
approximately US$13.5 billion of total facility until May 15. year, saw its share price shrink 32.6 per-
long-term debt at December 31, 2008. “May 15 is the key date for MGM in cent in the month from the 15 of Febru-
After the company run by billionaire the US,” says PWC’s Green. ary to the same day in March.
Kirk Kerkorian announced fourth quar- Asked whether the issues MGM is
ter and 2008 results below expectations, dealing with at a US corporate level have LVS – lowest value ever
it released a document saying that audi- the capacity to directly impact MGM
tors questioned the company’s ability to Macau, Green said: “I guess we will Las Vegas Sands (NYSE:LVS) had
stay in business. know soon enough,’’ pointing out that a very similar performance, falling 32.4
“Now the focus is on debt, the bal- MGM Grand Macau is a 50/50 joint-ven- percent on Wall Street in the same peri-
ance sheet and free cash flow. Regard- ture between MGM Mirage and Stanley od. The company, which owns The Vene-
less of the all-time low level of MGM’s Ho Hung-sun’s daughter, Pansy Ho. tian, Sands and Four Seasons in Macau,
stock, equity investors are not going to In its defence, MGM said most of fell to its lowest historical price on March
be comfortable until there is substan- its revenue is essentially cash-based: 9, standing at US$1.42 per share. Despite
tially more clarity of its debt situation,’’ “Our resorts, like many in the industry, a recovery to nearly US$2.60 in late
said KeyBanc Capital Markets’ analysts, generate significant operating cash-flow. March, there are no clear signs of sus-
Dennis Forst and Cann Hoe, who have Our industry is capital intensive and we tainable growth.
april 2009
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