Zhi Tong Cai Jing·2025-09-09 07:48Core Viewpoint - Morgan Stanley has downgraded the target price for Melco Resorts & Entertainment (00880) from HKD 3 to HKD 2.8, maintaining a "Reduce" rating due to disappointing interim results and expectations of continued market share loss [1][2] Group 1: Financial Performance and Projections - The company is expected to have a free cash flow equity (FCFE) yield of 8.5% by 2026 [1] - Morgan Stanley has reduced its EBITDA forecasts for Melco by 21% for this year and 8% for next year, along with a significant cut in earnings per share forecasts by 81% and 24% respectively [2] - The current enterprise value to EBITDA multiple for Melco is 13 times, with a projected free cash flow yield of only 4.1%, which is the lowest among peers [2] Group 2: Market Position and Competition - Melco's market share in the second quarter is projected to be 7.7%, down from 9.3% in 2024, compared to competitors like Sands China (24%), Galaxy Entertainment (19%), and MGM China (16.9%) [1] - The company plans to expand the Lisboa Hotel and acquire two satellite casino properties to increase its market share in the Macau Peninsula [1] Group 3: Financial Health - Melco's balance sheet remains tight, with net debt at 6.5 times EBITDA, the highest among its peers, while Sands China and MGM China have net debt at 2.8 times and 2 times EBITDA respectively [1]