When you are going for an IPO, you want to produce results like the soon-to-be launched MGM China did in Q1: US$106m of Ebitda. If that property can do US$500m this year, it will make the US$1.2bn spent on its construction look like a bargain. There is no doubt that the rising tide is lifting this boat very quickly, and it is being infinitely better managed than it was just a year ago. Kudos to Grant Bowie.

Quite what its heavily indebted parent wants to do with the Macau unit’s free cashflow after the IPO is an interesting question to consider, however. Will it go for broke (pardon the pun) in Cotai, or play prudent and stave off the wolves in the US by paying down debt? CEO Jim Murren is widely acknowledged as a financial genius, so we are sure there is a plan there that has been devised to unfold as and when conditions dictate. Right now, he thinks “macroeconomics are on our side”, so let’s wait and see.

The question on everyone’s lips remains, of course, when is this IPO going to happen? We still can’t imagine the Listing Committee of the HK stock exchange has a real problem with the partnership arrangement between one of the city’s social stars and the US entertainment giant post-IPO. But we must also take note of the less-than-cordial relationship existing between the US and China at present, which probably was’t helped by the lecture delivered to government officials recently by MGM’s most favored senator. It’s hard to tell, but you can never know what might have happened recently to make political interference in the listing process from Up North a real possibility. Indeed, does Beijing really want to see an American company taking a majority stake in such an important and sensitive industry, which is, let’s not kid ourselves, entirely dependent on mainland Chinese money? We would have thought they would want to see control of joint ventures moving the other way instead.

Maybe there are more important things to worry about, such as the next item in our newsletter today. But maybe not. Who are we to speculate about such things, anyway? Used with permission & copyright IntelMacau.com