Core Viewpoint - Melco Resorts & Entertainment reported better-than-expected Q2 2025 results, with net revenue of $1.328 billion, a 15% year-over-year increase and an 8% quarter-over-quarter increase, recovering to 91% of Q2 2019 levels [1] Group 1: Financial Performance - Adjusted property EBITDA was $378 million, up 25% year-over-year and 11% quarter-over-quarter, recovering to 84% of Q2 2019 levels, exceeding Bloomberg consensus estimate of $347 million [1] - The company maintained stable operating cost control, leading to improved profit margins [1] Group 2: Management Insights - Management indicated that the strong trend observed in June 2025 continued into July 2025, with expectations for this trend to persist into Q3 2025, driven by record visitor numbers at Macau properties and strong performance in the premium mass segment [1] - The company plans to close the Junket Room and three Mocha Clubs by the end of 2025, with an impairment loss of approximately $56 million recognized in Q2 2025 [1] - Management is optimistic about the benefits from the closure of competitor satellite casinos and the company's own satellite properties [1] - Competitors are increasing reinvestment rates, but the company remains focused on enhancing its products to retain customers [1] - Enhanced information technology for smart gaming tables is expected to optimize customer rebate expenditures [1] - The "The House of Dancing Water" show is helping to attract visitors back to City of Dreams, positively impacting non-gaming revenue [1] - Despite the impact of the Israel-Iran conflict on City of Dreams Cyprus, summer hotel bookings have significantly increased [1] - City of Dreams Sri Lanka is set to open on August 1, 2025, primarily targeting Indian customers, with expectations for a longer ramp-up period due to its status as the first resort of its kind in South Asia [1] - City of Dreams Manila's performance remained stable in July 2025 [1] - The company repurchased approximately $120 million worth of shares at about $5 per ADS in April and May 2025 [1] Group 3: Earnings Forecast and Valuation - The company maintains its adjusted EBITDA forecasts for 2025 and 2026, with the current stock price corresponding to 7 times the 2025 estimated EV/adjusted EBITDA [2] - A neutral rating is maintained with a target price of $8.50, reflecting an 8 times 2025 estimated EV/adjusted EBITDA, indicating a 1% downside from the current stock price [2] - For Melco International Development, the adjusted EBITDA forecasts for 2025 and 2026 remain unchanged, with an upgraded target price of 14% to HKD 5.80, reflecting a 20% discount to net asset value and a 7% upside from the current stock price [2]

Core Viewpoint - CICC maintains its outperform rating for Melco International Development (00200) and raises the target price by 14% to HKD 5.80, indicating a 7% upside potential based on the current discount level corresponding to a 20% net asset discount rate [1] Group 1: Financial Performance - Melco Resorts & Entertainment reported better-than-expected Q2 2025 results with net revenue of USD 1.328 billion, a year-on-year increase of 15% and a quarter-on-quarter increase of 8%, recovering to 91% of Q2 2019 levels [2] - Adjusted property EBITDA for Q2 2025 was USD 378 million, up 25% year-on-year and 11% quarter-on-quarter, recovering to 84% of Q2 2019 levels, exceeding the consensus estimate of USD 347 million [2] Group 2: Management Insights - Management indicated that the strong trend from June 2025 continued into July 2025, with expectations for this trend to persist into Q3 2025, benefiting from record visitor numbers at Macau properties and sustained performance from high-end gaming [3] - The company plans to close the Dragon Palace Casino and three Mocha slot machine clubs by the end of 2025, with an impairment loss of approximately USD 56 million recognized in Q2 2025 [3] - Management is optimistic about the benefits from the closure of competing satellite casinos and is focused on enhancing product offerings to retain customers [3] Group 3: Non-Gaming Revenue and New Developments - The "The House of Dancing Water" show has positively impacted non-gaming revenue by attracting visitors to City of Dreams Macau, with efforts to convert visitor traffic into gaming revenue [4] - Despite the impact of the Israel-Iran conflict on City of Dreams Cyprus, summer hotel bookings have significantly increased [4] - City of Dreams Sri Lanka is set to open on August 1, 2025, targeting Indian customers, with expectations for a longer ramp-up period due to its status as the first resort of its kind in South Asia [4] - City of Dreams Manila's performance remained stable in July 2025, and Melco Resorts repurchased approximately USD 120 million worth of shares at around USD 5 per ADS in April and May 2025 [4]