Ge Long Hui·2026-02-07 22:15Core Viewpoint - MGM China reported strong financial results for 4Q25, with net revenue of HKD 9.617 billion, a year-on-year increase of 21% and a quarter-on-quarter increase of 13%, recovering to 169% of 4Q19 levels [1] - Adjusted EBITDA reached HKD 2.753 billion, up 29% year-on-year and 16% quarter-on-quarter, exceeding Visible Alpha consensus expectations of HKD 2.449 billion [1] Financial Performance - The strong performance is attributed to the continued outperformance of high-end business segments, with MGM Cotai and MGM Macau's total gaming revenue recovering to 214% and 104% of 4Q19 levels, respectively [1] - The new long-term brand agreement with MGM US, effective from 2026, will increase brand usage fees from 1.75% to 3.5% of monthly net revenue, with an annual cap set to rise to USD 188 million in 2026 [1] Future Outlook - The new brand fee structure is expected to negatively impact net profit by approximately 14% according to estimates [2] - Management indicated strong hotel booking performance for the 2026 Spring Festival holiday starting February 17, 2026, with stable business performance leading up to the holiday [2] Valuation and Estimates - The company maintains its EBITDA forecasts for 2026 and 2027, with the current stock price corresponding to 6 times the estimated EV/EBITDA for 2026 [2] - The company retains an "outperform" rating with a target price of HKD 16.10, implying a 23% upside based on an 8 times EV/EBITDA multiple for 2026 [2]