MGM, China State Construction Deal


MGM Resorts International (MGM) recently inked a Strategic Cooperation Agreement with one of the leading construction companies, China State Construction Engineering Corporation, Ltd. in Beijing.

This new agreement was seen as a follow-on of its previous deal with China State Construction. Earlier this week, the company’s majority-owned subsidiary, MGM China Holdings Limited teamed up with China State Construction to set up a resort in Cotai, Macau – the only Chinese city where gambling is legal. The construction of this property, MGM Cotai is slated to be completed by early 2016. 

Under the terms of this latest Strategic Cooperation Agreement, China State Construction along with its operating arm, China Construction Americas, will be providing construction support to MGM Resorts to develop various other new properties worldwide.

We believe this agreement is in sync with MGM’s strategy to grow through China as well as other major locations. In fact, MGM’s geographical diversification will help it to gain market share as the economy progresses toward recovery and protect it from any regional downturns.

Beijing, China based real estate developer, China State Construction, also remains hopeful about its collaboration with MGM given the latter’s proven track record in the casino business.

Another casino company, Wynn Resorts Limited (WYNN) also collaborated with China State Construction to build its integrated resort, Wynn Macau in Macau.

MGM Resorts currently carries a Zacks Rank #2 (Buy). Other players in the casino gaming industry which look attractive at current levels include Melco Crown Entertainment Limited (MPEL) and Las Vegas Sands Corp. (LVS) both carrying a Zacks Rank #2 (Buy).

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