Melco Resorts: Riding the Wave of Macau's Gaming Market Recovery

Melco Resorts & Entertainment Limited (MLCO) has been at the forefront of the gaming industry's recovery in Macau, with its strategic focus on the Asian market driving long-term growth and profitability. As the company prepares to release its unaudited financial results for the fourth quarter and year ended December 31, 2024, investors are eager to learn more about its performance and prospects.

Macau's gaming market has witnessed a strong recovery in 2023, with mass gaming revenue (GGR) recovering to 75%-85% of 2019 levels. This rapid recovery has been driven by several key factors, including the relaxation of COVID-19 control measures and travel restrictions, the strengthening of the mass-market segment, and the opening of new resorts and facilities. Melco's Studio City Phase 2, which opened on April 6, 2023, has contributed significantly to the group's revenue and cash flow. Additionally, the completion of City of Dreams Mediterranean in 2023 will provide further growth opportunities for the company.

Melco has secured a new gaming concession in Macao, which allows the group to continue operating in the region. The new concession requires Melco to invest about US$1.5 billion in capital and operating expenses, supporting non-gaming amenities and events. This investment is expected to further boost the group's revenue and cash flow, as well as enhance the customer experience and build a stronger foundation for growth.

Melco's expansion into new markets, such as the Philippines and Cyprus, has also contributed to its overall revenue and growth. City of Dreams Manila, the company's flagship property in the Philippines, has shown solid results in the mass segment, despite being impacted by luck factors in the VIP segment. In Q3 2023, City of Dreams Manila recorded three of its best mass-table drop days of all time during the national holiday, 1-7 October. Additionally, City of Dreams Mediterranean and its satellite casinos in Cyprus have exhibited positive cash flow despite regional conflicts, generating significant revenue and contributing to the company's overall growth.



As Melco Resorts & Entertainment Limited prepares to release its financial results, investors can expect to see the positive impact of these trends on the company's performance. The company's debt-to-EBITDA ratio is expected to drop to 3.8x in 2024, below the downgrade threshold of 4.5x, indicating a strong financial position. This improvement in leverage, along with a return to healthy free operating cash flow, supports a stable rating outlook for Melco's operating subsidiaries.

In conclusion, Melco Resorts' strategic focus on the Asian gaming market, coupled with its expansion into new markets and proactive measures to address sectoral challenges, has positioned the company well to capitalize on the recovery of Macao's gaming market. As the company releases its financial results, investors can expect to see a positive impact on its performance and prospects.