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Melco Resorts and Entertainment Ltd ADR MLCO

Morningstar Rating
$7.17 −0.57 (7.36%)
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Company Report

Melco Sees Solid Recovery in 2023; Launch of Studio City 2 to Drive Further Upside

We believe the gambling market in Macao will enjoy solid growth in the longer term. This structural tailwind is driven by the rising middle class in China and the penetration rate of less than 2% in Macao, compared with Las Vegas' 13%. New hotel rooms by major operators in the next few years should accommodate increased and extended visits from bigger spenders from these provinces, and drive the top line for integrated resort operators like Galaxy Entertainment. With the gradual ramp-up of traffic allowed on the Hong Kong-Zhuhai-Macao bridge, new Hengqin border, and the Gongbei-to-Hengqin extension rail, Macao's carrying capacity for tourists should increase. In addition, neighboring Hengqin Island, 3 times the size of Macao, is under rapid development to complement Macao's growth.

Price vs Fair Value

MLCO is trading at a 39% discount.
Price
$7.73
Fair Value
$63.90
Uncertainty
High
1-Star Price
$71.59
5-Star Price
$1.15
Economic Moat
Gtllyh
Capital Allocation
Dvqcjpp

Bulls Say, Bears Say

Bulls

The Macao gaming sector is well positioned to benefit from China's reopening, which will allow the sector to restore its profitability meaningfully.

Bears

Melco Resorts will still face harsher license-renewal terms such as shorter license duration, requirement of nongaming investment, and 1% increase in gaming tax.

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News

Trading Information

Previous Close Price
$7.74
Day Range
$6.627.41
52-Week Range
$6.6214.45
Bid/Ask
$7.17 / $7.18
Market Cap
$3.18 Bil
Volume/Avg
3.9 Mil / 3.4 Mil

Key Statistics

Price/Earnings (Normalized)
Price/Sales
1.13
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Melco Resorts & Entertainment is one of only six licensed casino operators in Macao. It operates Altira, a complex focused on VIP customers; City of Dreams, an integrated resort in Cotai serving both mass-market and premium patrons; and Mocha Clubs electronic gaming machines. The company also has a majority interest in Studio City, which opened in 2015. Outside Macao, Melco owns City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus. The business mix in terms of adjusted EBITDA was about 84% from Macao with the rest largely from the Philippines as of 2019.
Sector
Consumer Cyclical
Industry
Resorts & Casinos
Stock Style Box
Large Core
Total Number of Employees
16,908

Competitors

Valuation

Metric
MLCO
00027
LVS
Price/Earnings (Normalized)
152.6129.31
Price/Book Value
2.649.97
Price/Sales
1.135.244.02
Price/Cash Flow
50.0114.70
Price/Earnings
MLCO
00027
LVS

Financial Strength

Metric
MLCO
00027
LVS
Quick Ratio
1.501.411.26
Current Ratio
1.651.451.31
Interest Coverage
−0.09−1.102.82
Quick Ratio
MLCO
00027
LVS

Profitability

Metric
MLCO
00027
LVS
Return on Assets (Normalized)
−3.47%0.80%6.41%
Return on Equity (Normalized)
1.00%33.98%
Return on Invested Capital (Normalized)
1.69%0.27%9.69%
Return on Assets
MLCO
00027
LVS
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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
LVS
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GXYEF
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SCHYF
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SCHYY
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MGM
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WYNN
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CZR
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