aswani suggests a hold rating on expectations of a boost from Macau and Las Vegas Sands' sluggish rebound. Here's his breakdown on MGM's prospects:
MGM China is not a top buy but is expected to gain from Macau growth momentum. In June which is typically a slow month, Macau had MOP (Macau Pataca) 20.8 billion in gross revenue, (about US$ 2.6 billion), which is encouraging. The region is set to meet 40% growth target, if it can achieve 36% growth in the second half of 2011.
The stock is trading at par with the sector and is not too expensive. MGM China does however face stiff competition from new casinos in the Cotai Strip over the next several years. MGM is unlikely to open its Cotai property before 2017/2018.
MGM China has failed to get an unconditional guarantee from Pansy Ho, daughter of Macau-based businessman Stanley Ho who owns 29% of the MGM Grand Macau, to reduce her stake in the group.