Daily Brief Credit: Melco Resorts – Earnings Flash – FY 2023 Results – Lucror Analytics and more

Melco Resorts’ (MLCO) results remained soft in Q4 and FY 2023. GGR from the company’s Macau properties improved sequentially in Q4, but continued to underperform peers relative to the 2019 levels. Moreover, EBITDA from City of Dreams (COD) Manila was flat, while earnings from COD Mediterranean fell due to conflict in the Middle East.

MLCO’s weaker earnings recovery meant that the pace of its net debt reduction in FY 2023 (-7% y-o-y) has lagged those of peers such as Sands China (-19%), MGM China (-23%) and Wynn Macau (-10%). That said, from a credit perspective, we are less concerned about the softer earnings performance of Wynn Macau and Melco Resorts (vs. for MGM China and Sands China), as we believe these companies will prioritise using FCF generation to gradually deleverage. In our opinion, the slower pace of deleveraging for Wynn Macau and Melco Resorts may delay the resumption of dividend payments, but is unlikely to affect the companies’ refinancing abilities.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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