Melco Resorts Upped to Outperform by Credit Suisse

Developer, owner and operator of integrated casino resorts in Asia and Europe, Melco Resorts & Entertainment, has seen its rating upped from Neutral to Outperform by Credit Suisse.

Summer Holidays and Chinese Policy

Credit Suisse said in its report that summer holidays and developments around Chinese policy were behind the decision to raise the rating of Melco Resorts to buy, considering these developments as positive catalysts.

Commenting in the report, Credit Suisse equity analyst, Kenneth Fong, outlined that a better-than-expected rate of recovery of the gambling industry in Macau, together with a supportive government in the SAR are the factors that should provide support for Melco shares.

Fong also marked the positive impact on the recovery of mass gaming from recent non-gaming developments in Macau. The return of live concerts at some of the city venues was reflected in a recent note by JP Morgan and considered a factor to raise June expectations.

“We like MLCO’s quality non-gaming assets, proven by its recent successful launch of non-gaming events, which should offer the most positive earnings surprise in 2Q23,” Fong wrote, noting that non-gaming would likely bring benefits to the company by speeding up the mass gaming segment recovery in times when “sustainability of the ability in attracting new players remains to be seen.”

Live Music Events Helping Mass Gaming

Melco Resorts was actively involved in the return of live music events to the city, featuring a series of 14 concerts by Cantopop artist Leon Lai Ming at its cinematically-integrated casino resort in Cotai, Studio City. Other venues featuring live concerts were The Venetian Macao and Galaxy Arena.

Besides Studio City, Melco Resorts currently operates two other integrated casino resorts in Macau, Altira Macau in Taipa, and City of Dreams, in Cotai, while its business in the SAR also includes the largest non-casino based operation of electronic gaming machines in the city, the Mocha Clubs.

Outside of Macau, Melco Resorts operates and manages via a subsidiary an integrated resort in the Entertainment City complex in Manila, City of Dreams Manila, in the Philippines, and is currently developing what is expected to be the largest premier casino destination resort in Europe, City of Dreams Mediterranean in Limassol, Cyprus.

Until City of Dreams Mediterranean becomes operational, Melco Resorts was allowed to open a temporary casino and is currently operating the first authorized casino in Cyprus.

In addition, Melco received a license to operate four satellite casinos, Cyprus Casinos, which, unlike the temporary facility, will continue to function after the opening of the integrated resort.