Forecasts for Japan from MGM Resorts' CFO and analysts

30 September 2024

Forecasts for Japan from MGM Resorts' CFO and analysts

MGM Osaka is a partnership between MGM Resorts, Orix Corporation of Japan, and a number of minority investors, with a total capitalisation of ¥1.27tn (£6.49bn/€7.78bn/US$8.7bn).

When it opens in late 2030, the integrated resort (IR) will have the capacity to host 20.5 million tourists annually, with 14 million of them being from within the country.

Position, positioning, positioning
At the 32nd Annual Leveraged Finance Conference of Deutsche Bank in New York, Halkyard discussed Osaka. Thirty million people are within three hours' train travel, he claimed, making it a huge market. It's also geographically closer to Beijing, Shanghai, and northern China than Macau is.

According to an analysis by John DeCree of CBRE, the development has the potential to generate more gross gaming revenue (GGR) than Singapore's two casinos combined in 2023. According to one projection, the IR located on Yumeshima Island in Osaka Bay will bring in ¥520bn in total revenue and ¥463bn in GGR year.

That's not all, DeCree said. Japanese market leader MGM "could be the only game in town for a period of time" due to the lack of competitors in the country.

Supported by analysts
Experts in the field feel the same way. Analyst David Katz of Jeffries reiterated a buy recommendation for MGM in a research dated September 16th.

To his delight, he saw that "corporate insider sentiment is positive"—a positive indicator. The $340,000 purchase of 10,000 shares of MGM stock was made by Halkyard last month. Additionally, Bill Hornbuckle, president and CEO, just acquired shares valued at nearly $2 million.

"One of the best undervalued cyclical stocks... generating greater profits than its primary rivals" is what financial blog Insider Monkey says about MGM Resorts. Stockholders should anticipate long-term gains from the company's planned opening of a casino in Japan.

Overall success was the basis for BTIG analyst Clark Lampen's and JMP Securities' reaffirmation of their buy on MGM.

Possibility of being delayed
The organisers of the 2025 World Expo, which is scheduled to take place next to the MGM site, have just requested a six-month extension on the building delay. Both the launch date (now planned for the autumn of 2030) and the associated expenses could be pushed back by that.

However, according to Halkyard, MGM Osaka benefits from the fair. As far as transit and site improvements are concerned, it supplies a portion of the infrastructure that will be crucial to our integrated resort.