Skip to main content

Market Overview

MGM China Is The Most Efficient Macau Operator

Share:
MGM China Is The Most Efficient Macau Operator

In a new report, Morgan Stanley analyst Praveen Choudhary takes a close look at which Macau casino operators are running the most efficient businesses. According to Choudhary, staff is the larest fixed cost for U.S.-listed Macau casino operators Las Vegas Sands Corp. (NYSE: LVS), Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL), MGM Resorts International (NYSE: MGM) and Wynn Resorts, Limited (NASDAQ: WYNN).

In fact, staff costs account for up to 70 percent of operating expenses for these four names.

“Thus, efficient management of staff cost could be a source of differentiation as far as margin and ROIC is concerned,” Choudhary explains.

Related Link: Macau Gaming Revenue Nearly Flat In February

Choudhary looked at a metric called employee efficiency, which is EBITDA divided by the total number of employees. He found that MGM has the highest efficiency of all the operators, followed by Sands, Wynn and Melco Crown.

Historically, Wynn had led the group in employee efficiency. However, the downturn in gaming revenue in Macau in the past two years has meant that Wynn’s high-paid staff has been unable to pull its weight like is has in the past.

Outperform-rated Melco Crown Entertainment is Morgan Stanley’s top Macau stock pick. The firm has an Equal-Weight rating on the China unit of Las Vegas Sands and Underweight ratings on the China units of Wynn and MGM.

Disclosure: the author is long Melco Crown and Wynn.

Latest Ratings for MPEL

DateFirmActionFromTo
Feb 2017Morgan StanleyUpgradesEqual-WeightOverweight
Jan 2017NomuraUpgradesReduceNeutral
Jan 2017Bank of AmericaUpgradesNeutralBuy

View More Analyst Ratings for MPEL
View the Latest Analyst Ratings

 

Related Articles (MPEL + WYNN)

View Comments and Join the Discussion!

Posted-In: Macau Morgan Stanley Praveen ChoudharyAnalyst Color Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
SAMEvercore ISI GroupMaintains1,500.0
SEAutonomous ResearchInitiates Coverage On378.0
ALHCMorgan StanleyInitiates Coverage On36.0
ALHCRaymond JamesInitiates Coverage On30.0
HAEMorgan StanleyDowngrades83.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com