MGM CHINA (02282) Rebounds Nearly 5%; Rising Royalty Fees Dent Earnings, Goldman Sachs Sees Recent Stock Correction as Overdone

Stock News01-09

MGM CHINA (02282) rebounded nearly 5%. At the time of writing, the stock was up 4.74% to HK$12.82, with a turnover of HK$110 million. On the news front, on December 23, MGM Resorts International announced a new long-term brand cooperation agreement with MGM CHINA. Starting in 2026, the brand usage fee MGM CHINA pays to its parent company will increase from 1.75% to 3.5%. Morgan Stanley estimates the brand usage fee will reach HK$1.2 billion in 2026, a significant increase from HK$600 million in 2025. Goldman Sachs released a research report stating that it estimates MGM CHINA's additional royalty payments to its parent will impact EBITDA by approximately 6% to 7% and lead to a downward revision of profit forecasts by about 13% to 14%. It anticipates that if the company maintains its dividend payout ratio at around 50%, this could result in a reduction in dividend per share. Following the announcement of the royalty fee news, MGM CHINA's stock price fell approximately 19%, and the firm believes the recent stock price adjustment appears somewhat excessive.

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