Companies

MGM China shares open firmer in HK debut

(Agencies)
Updated: 2011-06-03 13:25

MGM China Chairperson and Executive Director Pansy Ho (L) shares a toast with CEO and Executive Director Grant Bowie during the debut of MGM China at the Hong Kong Stock Exchange June 3, 2011. MGM China Holdings Ltd, a joint venture between MGM Resorts International and Hong Kong billionaire Pansy Ho, jumped more than 5 percent on its market debut on Friday, with investors keen for exposure to the world's largest gaming market. [Photo /Agencies]

MGM China Holdings Ltd a joint venture between MGM Resorts International and Hong Kong billionaire Pansy Ho, jumped more than 5 percent on its market debut on Friday, with investors keen for exposure to the world's largest gaming market.

MGM China's $1.5 billion initial public offering (IPO), priced at the top of an indicated range at $15.34 per share, was trading at HK$15.62 ($2) by 0224 GMT after opening up at HK$16.18.

The IPO comes as Macao's casino market is booming. Gambling revenue is about four times larger than that of neon rival Las Vegas and has continued to climb to record highs.

Related readings:  MGM China targets $1.5 billion IPO in Hong Kong  Hainan Airlines still keen to buy MGM stake  MGM China offering likely in Q1  China welcomes MGM with open arms

Macao said January-May revenue totaled about $13 billion eclipsing Las Vegas' $10 billion for the whole of 2010.

MGM China's, backed by cornerstone investors including hedge fund manager John Paulson, raised concerns about hefty valuations after setting its IPO price at the top of the range.

Over the past year, investors have been piling into operators such as SJM Holdings Ltd, owned by Pansy Ho's father, Macao casino mogul, Stanley Ho and Galaxy Entertainment Group Ltd, which opened a $2 billion property in May.

Shares in SJM have gained more than 240 percent in the last 12 months, while Galaxy Entertainment, owned by Hong Kong property and construction tycoon, Lui Che Woo, is up more than 390 percent.

MGM China is the second-smallest operator by market value out of the six licensed casino companies. With a market capitalization of about $7 billion, it is around a third the size of rival US operator Las Vegas Sands Corp's Macao unit Sands China Ltd, valued at around $21 billion.

Analysts are cautious that record revenue gains will soften in coming months on a lack of catalysts such as long public holidays, prompting some investors to lock in profit.

MGM China, with its towering bronze, gold and silver property on Macao's main peninsula, has a market share of about 11 percent in Macao -- compared with about 30 percent held by SJM, the largest casino operator. SJM has nearly three times the revenue of MGM China.