Macau Project Will Add $665M in Equity to MGM Resorts (MGM)

January 9, 2013 1:16 PM EST
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This morning MGM Resorts International (NYSE: MGM) announced that Macanese regulators approved a land concession, paving the way for ground-breaking on its $2.5 billion project. The site will feature a 1600 room hotel, 500 tables, and 2500 slot machines. It is scheduled to open in 2017. The announcement comes 6 months ahead of schedule.

Commenting on the news, Deutsche Bank's Andrew Zarnett said, "Based on our expectations that the new Cotai property can generate EBITDA of $400 million in 2017 and applying an 11x multiple, the implied value would be $4.4 billion. Deducting the cost of construction (approx $2.5 billion) and discounting the value at 15%, we estimate that the Cotai development adds approx $665 million of incremental equity to MGM Resorts."

Zarnett also said he expects MGM to continue dividend payments, as it appears to have ample liquidity to fund the project. Deutsche Bank has a Buy rating on MGM.

For an analyst ratings summary and ratings history on MGM Resorts (NYSE: MGM) click here. For more ratings news on MGM Resorts click here.

Shares of MGM Resorts closed at $12.95 yesterday.

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