MGM's Digital Business Succumbing to Competitive Pressure, While Vegas and Macao Demand Are Healthy

No-moat MGM Resorts' Macao's (17% of 2023 EBITDAR) sales rebounded sharply in 2023 (reaching back above 2019's level in the second quarter) after the Chinese government removed covid restrictions on Jan. 8, 2023. And although Macao faces elevated operational risk from government oversight, the company remains positioned for the attractive long-term growth opportunities in the region. Further, MGM's leading omnichannel presence in the US should aid it in the highly competitive sports betting and iGaming growth markets. Also, we expect the company to have a Japanese integrated resort in 2030, accounting for an estimated 3% of total EBITDAR that year and generating attractive returns on invested capital in the low teens.