Macquarie Cuts MGM CHINA (02282) Target Price to HK$21, Sees Current Share Price as Good Entry Point

Stock News2025-12-31

Macquarie released a research report stating that MGM CHINA's (02282) new brand licensing agreement, effective from January 2026, will increase the fee from the original 1.75% of monthly net consolidated revenue to 3%, with a maximum term of 20 years.

Based on maintaining the 2026 expected EV/EBITDA multiple at 10 times, the target price was lowered by 7% from HK$22.6 to HK$21, with an "Outperform" rating retained.

Furthermore, MGM CHINA announced in March that it would increase its dividend payout ratio from the original 35% to no less than 50%; assuming a 50% payout, the adjusted 2026 expected dividend yield could reach 5.4%, which remains attractive.

The report noted that despite a significant increase in licensing fee expenses, this long-term agreement mitigates the risk of further licensing fee hikes for MGM CHINA over the next 20 years.

The stock price has already retreated by 17%, making the current level a good entry point.

Due to the estimated increase in licensing fees, Macquarie reduced its 2026-2027 EBITDA forecasts for MGM CHINA by 5.1% and 4.8%, respectively.

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