Saturday, August 13, 2022

Diversification to “future proof” Melco: MS


Melco Resorts & Entertainment’s diversification away from its home base of Macau will help to “future proof” the company and help its EBITDA to outperform peers, according to analysts at Morgan Stanley.

Answering frequently asked questions by shareholders, the firm points out that in the past five years EBITDA from the Philippines has grown faster than Macau and generated a return on invested capital of 25 percent.

Melco owns the City of Dreams Manila and is building an integrated resort on Cyprus, where it has a monopoly license. It also recently bought an almost 20 percent stake in Australia’s Crown Resorts and is seeking a license in Japan. 

“As to the conglomerate discount, LVS' global gaming business does not result in a discount, and we expect MLCO to have a controlling stake in Crown in time,” the firm said. 

Morgan Stanley said factors that could reduce the stock trading discount to its peers include buying out minority interests in its Studio City resort, repatriation of cash flow from the Philippines and buying a controlling stake in Crown. 

The note cautioned however, that after having returned more than 45 percent of its market cap over the last three years, the dividend may be capped in the near term, which won’t help the share price. 

Morgan Stanley expects Melco and MGM China to post the highest growth in EBITDA in 2019.

 

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

3rd party / Cookies
Show settings
Contact us

ASIA GAMING BRIEF
PO Box 1139, Macau SAR
Tel: +853 2871 7267
Fax: +853 2871 7264

Asia Gaming Brief