Morningstar•January 17, 2022

Melco Resorts & Entertainment Limited: The Draft of Macao Regulatory Changes Removes Many of the Overhanging Concerns on Casino Licenses

Symbols

MLCO

Sector(s)

Consumer Cyclical

Rating

Current Price

$5.46

Fair Value

Economic Moat

Stewardship

Summary

Melco Resorts is one of only six companies with a licence to operate casinos in Macao, the only region in China with legalized gambling. It operates Altira, a complex focused on VIP customers; City of Dreams, an integrated resort in Cotai serving both mass-market and premium-end patrons; and Mocha Clubs electronic gaming machines. In addition, the company also has a majority interest in Studio City, a new casino in Cotai that opened in October 2015. Outside Macao, Melco also owns City of Dreams Manila in Philippines, and 75% stake in City of Dreams Mediterranean in Cyprus. The business mix in term of adjusted EBITDA was about 84% from Macao, and the rest largely from Philippines as of 2019.

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Analyst Profile

Jennifer Song

Equity Analyst

Jennifer Song is an equity analyst for Morningstar (Shenzhen) Ltd., a wholly owned subsidiary of Morningstar, Inc. She covers industrials and utilities securities listed in Hong Kong and China.Prior to joining Morningstar in 2012, Song was an investment manager at Royal Bank of Canada (Asia) and was responsible for discretionary portfolio investment in global equities. Before joining RBC Asia in 2011, she worked for China BOCOM Insurance as a portfolio manager, investing in Hong Kong equities. Song began her career in 2006 as a research analyst for Marco Polo Pure Asset Management, covering China and Hong Kong securities.Song holds a master's degree in actuarial studies from the University of New South Wales.