MLCO

Melco Resorts & Entertainment Ltd - ADR

Consumer


Presented:03/02/2023
Price:$13.87
Cap:$6.17B
Current Price:$7.38
Cap:$3.25B

Presented

Date03/02/2023
Price$13.87
Market Cap$6.17B
Ent Value$12.51B
P/E RatioN/A
Book ValueN/A
Div Yield0%
Shares O/S445.10M
Ave Daily Vol5,063,689
Short IntN/A

Current

Price$7.38
Market Cap$3.25B
Melco Resorts & Entertainment Ltd. engages in the management and development of casino gaming and entertainment resort facilities. It focuses on the administration of Mocha Clubs, Altira Macau, City of Dreams, Studio City, and City of Dreams Manila. It operates through the following geographical segments: Macau, the Philippines, Cyprus, and Corporate and Other. The company was founded by Yau Lung Ho on March 20, 2003 and is headquartered in Hong Kong.

Publicly traded companies mentioned herein: Melco Resorts & Entertainment Ltd. (MLCO), Las Vegas Sands Corp. (LVS), Wynn Resorts Ltd. (WYNN)

Highlights

The presenter is long shares of Melco Resorts & Entertainment (MLCO) and is bullish based on the economic recovery related to the China reopening. He believes the shares can double in the short term as this Hong Kong-based resort and casino operator is experiencing a strong surge toward pre-Covid business levels in Q1’23 in its Macau properties, historically the source of 2/3 company revenues. 

MLCO’s annual EBITDA exceeded $1.6b in 2019. The company’s performance suffered significantly during Covid lockdown with 2022 EBITDA down to -$62mm. It has been observed that the January 8th reopening has unleashed tremendous activity and the presenter believes the company has already generated $800-900mn of EBITDA to date this year. This would imply that after only a month and a half, MLCO is already at 50% of total 2019 EBITDA. Return of visitation is roughly 30% of 2019 levels but spending is at 60% of 2019 levels leading him to believe that there is significant pent-up demand and that 2023 EBITDA can surpass 2019. Based on this trajectory he estimates the business is trading at a 12% free cash flow yield

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Idea Discussion

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