* Government gives go ahead for MGM casino
* MGM will initially pay $56.4 mln for land lease
* Project still needs various construction OKs
HONG KONG/LOS ANGELES, Jan 9 A $2.5 billion
Macau casino planned by MGM China Holdings Ltd, the
Chinese arm of MGM Resorts International, received
government approval on Wednesday, sending MGM China shares up
sharply and boosting other casino companies with operations in
The announcement in Macau's official gazette comes after MGM
said in October it would pay the government 450 million patacas
($56.4 million) as an initial installment to lease the land.
The project still requires various construction
approvals before building can start.
MGM competes in Macau, the world's largest gambling
destination, against other U.S. rivals such as Sands China Ltd
and Wynn Macau Ltd.
Cotai, a stretch of reclaimed land that connects to Macau's
crammed peninsula where MGM already has one casino, has been a
key focus for Macau casino operators looking to expand in the
The shares of the parent firms in the United States
initially rose on Wednesday on renewed growth expectations by
MGM Resorts shares traded as high as $13.18 earlier in the
day before closing down 5 cents at $12.90 a share. Las Vegas
Sands Corp shares rose 0.6 percent to close at $52.41 a
share, while Wynn Resorts Ltd shares closed up nearly
0.4 percent at $121.52.
"We continue to like the Macau-centric stocks heading into
2013, and while the stocks have had a strong move over the last
month, we still see attractive upside ahead with earnings
momentum in the high margin mass segment and emerging signs of a
recovery in the VIP segment," said Joseph Greff, an analyst with
JP Morgan Securities in a note on Wednesday.
"As the Macau gaming market continues to expand beyond
current investor expectations for market-wide growth and
co-specific consensus estimates move upwardly, we see the
potential for the stocks to move up on positive estimate
revisions, higher valuations for existing cash flows and
valuations to embrace
future Cotai development projects, all providing for more
MGM is expected to open in 2016 on Macau's Cotai strip at
the same time as other new properties by the six licensed
operators. MGM's land concession contract will have an initial
term of 25 years, the group said in a statement to the Hong Kong
stock exchange on Wednesday.
MGM China shares closed at $15.82, up 7.02 percent on the
Hong Kong Exchange, ahead of casino peers SJM Holdings Ltd
, which was up 3.5 percent, and Galaxy Entertainment
Group Ltd, which closed 1.7 percent higher.