Melco Resorts (Macau) Ltd.

Overview Key strengths Key risks Solid presence in Macao, which grants few licenses and caters to a high population base. Vulnerable to economic cycles and social risks in Macao due to concentration of operations there. High-quality assets, with good brand recognition in the Macao, the Philippines, and Cyprus gaming markets. Weak credit metrics at least through 2024, with recovery likely over the next 12-18 months or so. Solid liquidity with a spread-out maturity profile. Macroeconomic headwinds in China could hamper recovery and slow deleveraging. In the first quarter of 2024, market-wide mass gross gaming revenue (GGR) improved to 10% more than that in the first quarter of the pre-COVID year of 2019. VIP (or high roller) GGR was at 39%

...Solid growth to continue in Macao's mass gaming segment. In the first quarter of 2024, market-wide mass gross gaming revenue (GGR) improved to 10% more than that in the first quarter of the pre-COVID year of 2019. VIP (or high roller) GGR was at 39% of first quarter 2019 levels. The recovery was in line with our expectations set late last year. Our base case assumes mass GGR--a key driver for EBITDA--in 2024 will be 5%-15% stronger than in 2019. This implies a year-over-year increase of 20%-30%, led by higher visitor numbers and expanded hotel capacity. Based on the trends so far this year, the 2024 GGR is likely to be at the upper end of our forecast range. VIP GGR will likely stay near current levels. Operators are unlikely to significantly expand junket VIP operations amid tightened regulations, in our view. Melco Resorts & Entertainment Ltd. (MLCO)'s EBITDA recovery should accelerate in the coming quarters. MLCO is the parent and credit driver of Melco Resorts (Macau) Ltd. (MRM). We...

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