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MGM Resorts International says its integrated resort project in Japan is moving ahead steadily, with construction progress already visible at MGM Osaka. The company expects the development to become Japan’s first legal casino resort when it opens in 2030.
Project Progress
The construction is taking place at the Yumeshima Island in Osaka and will have an estimated cost of around $10 billion as a fully-fledged integrated resort. This resort has been designed to include hotels, convention centers, entertainment facilities, and extensive casino floors. MGM and Orix Corporation are the major parties involved in the development and operation of the resort. Each party holds 40% of the project.
During the earnings call, MGM management said more than 40% of the foundation piles have been installed or completed. Construction of the first concrete floor is complete, and the first structured steel has been put in place. This illustrates the steady progress being made on this project as scheduled.
According to the casino group, the project will have MGM Resorts as its only licensing and operator once it launches in Japan. The company sees the project as a major part of its longer-term growth plans and has continued to highlight the scale of the Japanese market.
Funding Plan
The company said funding for Japan this year is expected to total about $200 million to $225 million, after it invested $140 million in the first quarter. Much of that spending will be covered by proceeds from the yen-denominated credit facility MGM closed last October.
MGM said the financing means it is prefunded for this year. That gives the company room to keep advancing construction while managing the capital required for the project.
The resort remains one of MGM’s most significant development efforts, and the latest update suggests the company is confident in both the schedule and the funding structure supporting the buildout.
Market Scale
In discussing the project, MGM’s CEO Bill Hornbuckle referred to the size of the population in Japan and the number of tourists the nation receives. He stated that the country has more than 120 million people living in it and hosts around 40 million foreigners annually.
Those figures continue to be central to the company’s outlook for MGM Osaka. The scale of the market is a key reason MGM has positioned the resort as a major investment in its global portfolio.
The company’s latest comments indicate that it still sees strong potential in Japan, particularly as construction moves into more visible phases and the opening date draws closer.
Investor View
Texas Capital analyst David Bain estimates that MGM Resorts’ Japan integrated resort should be valued at $9 per share. That view adds another layer to the market’s assessment of the project as construction continues.
MGM stock had increased by 1.1% in pre-market trading following the release of the firm’s first-quarter financial results after-hours on Thursday. The increase was triggered by an update on the project in Japan.
MGM Osaka is important to the casino firm, and the current milestones suggest that the project continues to make significant progress towards its goal launch in 2030.
Source: Seeking Alpha
