CFO of MGM Resorts and analysts optimistic about Japan

Jonathan Halkyard, of MGM, referred to Japan as "the single best development opportunity in gaming" during a Deutsche Bank conference on Tuesday (24 September). The sole integrated resort in the country is being constructed by MGM.

Orix Corporation of Japan, MGM Resorts, and a number of minority investors formed MGM Osaka, a joint venture valued at ¥1.27tn (£6.49bn/€7.78bn/US$8.7bn).

When it opens in late 2030, the integrated resort (IR) will have the capacity to host 20.5 million tourists annually, with 14 million of them being from within the country.

Position, positioning, positioning
While in New York for Deutsche Bank's 32nd Annual Leveraged Finance Conference, Halkyard discussed Osaka. He described it as a "massive market," adding that 30 million people were within three hours of the market by train. It's also geographically closer to Beijing, Shanghai, and northern China than Macau is.

The property has the potential to generate more gross gaming revenue (GGR) than Singapore's two casinos combined, according to an analysis by CBRE's John DeCree from 2023. According to one projection, the IR located on Yumeshima Island in Osaka Bay will bring in ¥520bn in total revenue and ¥463bn in GGR year.

Another major benefit was mentioned by DeCree. Japanese market leader MGM "could be the only game in town for a period of time" due to the lack of competitors in the country.

Promising verdict from analysts
That excitement is shared by industry analysts. David Katz, an analyst at Jeffries, kept MGM's buy rating in a report dated September 16th.

To his delight, he saw that "corporate insider sentiment is positive"—a positive indicator. Halkyard spent $340,000 last month to purchase 10,000 shares of MGM stock. Not to mention that Bill Hornbuckle, president and CEO, just spent nearly $2 million on shares.

"One of the best undervalued cyclical stocks... generating greater profits than its primary rivals" is what financial blog Insider Monkey says about MGM Resorts. The stock is likely to benefit in the long run from the eventual debut of its casino in Japan.

Overall success was the basis for BTIG analyst Clark Lampen's and JMP Securities' reaffirmation of their buy on MGM.

Possible postponement
Organisers of the 2025 World Expo, which is scheduled to take place next to the MGM site, have recently requested a six-month extension on the construction delay. Both the launch date (now planned for the autumn of 2030) and the associated expenses could be pushed back by that.

The expo, according to Halkyard, is good for MGM Osaka. When it comes to transportation and site enhancements, it supplies a portion of the infrastructure that will be crucial for our integrated resort.

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