CICC Maintains Outperform Rating on Melco International Development with HK$5.60 Target Price

Stock News04-20

CICC has released a research report stating that it largely maintains its adjusted EBITDA forecasts for Melco International Development (00200) for 2026 and 2027. The firm reiterates an Outperform rating and a target price of HK$5.60, implying a 30% upside from the current share price. Considering that market concerns about Melco Resorts & Entertainment making additional trademark license fee payments to Melco International Development have been digested, CICC has upgraded its rating on Melco Resorts & Entertainment (MLCO.US) to Outperform, while maintaining a target price of US$8.20. This corresponds to a 2026 EV/EBITDA multiple of 8.6x, suggesting a 39% upside from the current share price. CICC's key views are as follows:

The ramp-up of the Sri Lanka and Cyprus projects is progressing. City of Dreams Sri Lanka opened in August 2025. After two quarters of ramp-up, the firm expects its growth to accelerate. It is projected that this project will contribute approximately US$13.13 million in incremental EBITDA to Melco Resorts & Entertainment in the first quarter of 2026. CICC believes the market has not yet fully priced in this contribution, which is expected to be gradually reflected over the coming quarters.

The total gaming revenue market share of City of Dreams Macau continues to increase. Driven by strong performance in the premium mass and VIP segments, the firm anticipates its total gaming revenue market share will rise from 9.4% in the fourth quarter of 2025 to 10.1% in the first quarter of 2026. Benefiting from the closure of satellite casinos, the gaming revenue market share of Studio City and Altira Macau has experienced an increase exceeding expectations. In the first quarter of 2026, CICC observed that some customer demand from former satellite casinos has begun shifting to Studio City and Altira Macau, aided by comparable minimum betting levels on gaming tables at these properties. Consequently, the firm expects their mass market business performance to be better than anticipated.

How CICC's view differs from the market: The firm believes the market has not yet fully reflected the ramp-up progress of the Sri Lanka project.

Potential catalysts: Upside from overseas operations and increased market share of Macau projects.

Risk warnings: New project ramp-up progress may fall short of expectations; intensified competition could lead to a decline in market share.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment