MGM China Cuts Interim Dividend to HKD0.25 Amid Increased Royalty Charges

MGM China Holdings Limited has announced its interim dividend at HKD0.250 per share, down by HKD0.313 per share compared to the year-ago period amid lower profitability for MGM during the first half of 2026. MGM noted in its filing to the stock exchange on Thursday that it will cost the company just below HKD950 million, or $121.1 million, to pay the dividend on September 3.

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Board Cites Financial Position In Decision

The board said it resolved to declare the interim dividend after considering the group’s latest general financial position, existing cash flow, future capital requirements, and other relevant factors. Under the company’s policy, semi-annual dividends may not, in aggregate, exceed more than 50% of the anticipated consolidated annual profits in any one year.

The main beneficiary of the dividend payment in cash terms will be the majority owner, MGM Resorts International, which controls about 56% of MGM China’s issued share capital. The U.S.-based parent remains the largest shareholder in the Hong Kong-listed operator.

MGM China reported profit attributable to its owners of about HKD1.90 billion for the first 6 months of 2026, down 20.2% from a year earlier. That came on first-half revenue that rose 4.4% year-on-year to HKD17.39 billion.

Adjusted EBITDA for the 6 months to June 30 stood at HKD4.78 billion, 1.9% lower than in the prior-year period. The company operates 2 properties in Macau: MGM Macau on the city’s peninsula and MGM Cotai in the Cotai district.

Higher Branding Fees Hit Earnings

The firm’s profitability this year has been affected by an increase in branding-related fees paid to its parent. MGM China paid US$81 million in branding-related fees in the first half, compared with US$37 million a year earlier.

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The new branding-related fees, which took effect on January 1, doubled the percentage of MGM China’s adjusted consolidated net monthly revenues that must be paid as a licensing fee to use the MGM brand. The rate increased from 1.75% of such revenues to 3.5%.

That change has reduced the amount of profit available for distribution and other corporate purposes. Brokerage Jefferies had said in a December note that it expected MGM China’s dividend per share to be lower for 2026 and 2027 because of the higher royalty fee percentage payable to its U.S. parent.

Dividend Outlook And Market View

The latest dividend declaration aligns with earlier expectations that payouts would ease as the increased royalty fee flows through the results. The reduction from HKD0.313 to HKD0.250 per share reflects the combined effect of lower profit and the higher cost of using the MGM brand.

Even with the cut, the company said it maintained its dividend policy framework, which caps semi-annual payouts at 50% of anticipated consolidated annual profits. The board’s reference to cash flow and capital requirements suggests it is balancing shareholder returns against the need to preserve flexibility for future investment.

With the interim dividend now set, attention will turn to how the full-year payout compares once the second-half results are released.

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Source: GGR Asia