Melco International Development Limited

All figures HK$ million unless stated; Melco International consolidated, HKFRS; FY = calendar year.

Income statement

Sources: AR21, AR22, AR23, AR24, AR25; FY2022–FY2023 attributable loss from Inside Asian Gaming coverage of AR23. FY2024 basic/diluted EPS restated to HK$(0.40) in AR25 for the rights issue. FY2021 attributable loss not captured in sources reviewed. Casino companies do not report gross profit.

Margins

Analyst calc. from §6.1. Revenue CAGR FY2021–FY2025: 26.6% (analyst calc.); FY2023–FY2025: 16.7%.

Commentary. The five-year arc has three distinct phases. FY2021–FY2022 were pandemic-impaired: revenue fell 32.4% in FY2022 as Macau and mainland border restrictions intensified, Adjusted EBITDA turned negative (HK$-362M) and loss after tax reached HK$9.99bn (AR22). FY2023 was the re-opening inflection: revenue nearly tripled on the January 2023 lifting of restrictions plus the openings of City of Dreams Mediterranean and Studio City Phase 2, and Adjusted EBITDA recovered to HK$7.51bn, though heavy interest and an HK$1.11bn Altira impairment kept the bottom line negative (AR23; IAG). FY2024–FY2025 show operating leverage: revenue +22.5% and +11.2%, Adjusted EBITDA margin expanding to 26.4%, operating margin nearly doubling to 13.7% in FY2025, and the group returning to profit attributable to owners of HK$1.06bn. FY2025 profit was flattered by a net impairment reversal of HK$238.5M (Studio City reversal of HK$889.0M offset by a Cyprus impairment of HK$591.7M and smaller Mocha/Altira charges), versus a HK$949.7M net impairment charge in FY2024 (AR25 Note 5(b)). Stripping both, underlying operating income still rose ~53% (analyst calc.). The persistent structural drag is interest: HK$4.04bn in FY2025 absorbed 73% of operating income.

Balance sheet

Sources: AR21–AR25 balance sheets. Net debt analyst calc.

Interim update (30 Jun 2026, IR26): total assets HK$81,934M; cash HK$7,951M; borrowings HK$57,624M (current HK$1,329M; non-current HK$56,295M); net debt HK$49,673M (analyst calc.); net current liabilities HK$350M; total equity HK$9,180M; equity attributable to owners HK$1,971M; gearing 70.3%; unused borrowing capacity HK$14.25bn.

Commentary. Equity attributable to owners collapsed from HK$665M (FY2023) to HK$46M (FY2024) — effectively near-zero book equity at the parent level — before being rebuilt to HK$1.91bn by the FY2025 profit and the HK$780M rights issue. The FY2024 net current liability position (HK$-7.36bn) reflected US$1.0bn 2025 MRF notes and the 2025 SCF notes falling into current; both were refinanced/redeemed in 2025 (AR25 Note 13). Goodwill (HK$5.3bn) and intangibles (HK$19.0bn, largely the Macau concession and trademarks) represent ~29% of total assets.

Cash flow

Sources: AR25 Notes 3, 13. Operating cash flow was not included in the results announcements reviewed (the full annual report contains the cash-flow statement). Melco International did not repurchase its own shares in 1H2026 other than share-award trust purchases (2,747,000 shares, ~HK$9.2M; IR26). At the subsidiary level, Melco Resorts repurchased ADSs worth ~US$76.65M in 1H2026 (IR26 Note 14) and ~US$77.2M between 1 Jul and 31 Aug 2026 (IR26 Note 17).

Melco Resorts capex (US$): 1Q2026 US$73.6M; 2Q2026 US$123.9M, mainly City of Dreams enhancement projects (MLCO-Q 6-K; HKEX 13 Aug 2026).

Ratios

Commentary. Deleveraging is real but slow: net debt/EBITDA improved from 5.7x to 4.6x in FY2025 (consistent with Moody's projection of MLCO adjusted leverage falling from ~6.7x at June 2025 to ~5.4x in 2026; MDY). Interest cover on an operating-income basis crossed 1.0x for the first time post-pandemic in FY2025. Receivables quality warrants monitoring: of HK$1.90bn gross trade receivables at 30 Jun 2026, HK$1.13bn were more than six months past due, against a HK$980M credit-loss allowance (IR26 Note 10).

Melco Resorts (operating subsidiary) — US$ cross-check

Sources: MLCO-Q (4Q22 and 4Q23 releases via HKEX; 4Q25 release via HKEX/Tiger). FY2023 revenue figure is from Melco Resorts' FY2023 release as recalled; the HKEX extract reviewed confirms FY2023 Adjusted Property EBITDA and net loss but truncated the revenue line — treat FY2023 revenue as requiring verification.

2026 quarterly trajectory (Melco Resorts, US$ M):

Sources: MLCO-Q; GGRAsia; Benzinga; HKEX 13 Aug 2026. 1Q2026 property EBITDA "approximately US$381M" per earnings-call summary (StockTaper).

Management guidance

No numeric guidance at the parent level. Management describes Macau tourism momentum as solid but competition as intense, positions REM, the southwest gaming area and Studio City attractions as near-term growth drivers, flags challenging conditions in the Philippines and Cyprus, and expects Sri Lanka to keep building (IR26 Outlook). Melco Resorts aims to resume a dividend by end-2026 (1Q26 call).

Consensus

Earlier (FY2024) aggregator commentary pointed to ~2.7% p.a. revenue growth expectations (Simply Wall St); Moody's projected continued but more moderate MLCO revenue growth in 2026 (MDY).

Bull case

1. Deleveraging plus buybacks compound look-through value: net debt/EBITDA fell from 5.7x to 4.6x in FY2025; MLCO buybacks raised the parent's economic stake by 1.6pp in one half-year; a resumed MLCO dividend would create upstream cash for the parent.

2. Premium product cycle: REM, retail revamp and House of Dancing Water could lift City of Dreams yield back towards 1H2025 EBITDA levels (US$421.5M vs US$362.1M in 1H2026) once VIP hold normalises (hold-adjusted 2Q2026 EBITDA was US$312M vs reported US$304M).

3. Valuation: ~6x TTM P/E and ~6x EV/EBITDA (analyst calc.) with HK$2.69 near the lower end of 2026 trading.

Bear case

1. Macau stall: 1H2026 Macau revenue +0.7%; 2Q2026 MLCO revenue −6% and Adj. Property EBITDA −19.6% with lower-than-expected visitation.

2. Holding-company structure: thin parent equity, parent-level debt and the Ho family's 61% control limit minority leverage; persistent related-party financing raises governance discounts.

3. International drag: Cyprus impaired and geopolitically exposed; Philippines revenue down 13% in FY2025; Altira repeatedly impaired.

Catalysts and monitorables (next 12 months)

Analyst verdict

Melco International has completed the hardest part of its post-pandemic repair. Between FY2022 and FY2025 revenue almost quadrupled, Adjusted EBITDA swung from a HK$362M loss to HK$10.6bn, the group returned to an attributable profit of HK$1.06bn, and an aggressive refinancing programme — the 2025 maturities cleared, the main revolver extended to 2031 and upsized, the parent facility pushed to 2028 and partly prepaid from the trademark sale — has removed near-term solvency questions that were real as recently as early 2025, when the company relied on covenant waivers, controlling-shareholder loans at 11% and a deeply discounted rights issue.

The equity story has now shifted from survival to returns, and here the evidence is mixed. Operating momentum faded in 2026: 1H2026 revenue grew only 2.7% while Adjusted EBITDA fell 5.7% and attributable profit 11.8%, and Melco Resorts' 2Q2026 showed a near-20% EBITDA decline as Macau visitation and VIP hold disappointed. Against that, the luxury product pipeline is unusually concrete (REM, retail revamp, new gaming area), the international portfolio is diversifying slowly, and Melco Resorts is shrinking its share count at a pace that steadily increases the parent's look-through ownership.

For minority investors the decisive variables are structural rather than cyclical: the parent remains a levered, controlled holding company with ~70% gearing, no dividend, and recurring connected-party arrangements, which justifies a persistent discount to the underlying operating asset. At ~6x TTM earnings and ~6x EV/EBITDA, the shares price in much of that discount. Our synthesis is neutral with a positive bias: upside depends on visible evidence of REM-led yield improvement in Macau, normalised VIP hold, and — most importantly — a Melco Resorts dividend that converts look-through value into parent cash flow. Failing those, the stock is likely to remain range-bound and highly sensitive to monthly Macau GGR prints.

End of dossier. All forward-looking statements are analyst interpretation of company disclosures.