Melco Resorts Earnings: Solid Recovery Underway; Studio City Phase 2 Is Online

In line with its Macao peers, narrow-moat Melco Resorts witnessed a solid recovery in the first quarter, with revenue and adjusted EBITDA reaching 53% and 47%, respectively, of 2019 levels, despite fewer available rooms from the ongoing labor shortage. Performance is within our expectation. With hotel room supply and transportation capacity continuing to recover, we expect Melco Resorts to see growth accelerate in the coming quarters. We maintain our profit forecast and fair value estimate of USD 12.80 per share, and we think the shares are fairly valued as of market close on May 10.