Casino group Melco Resorts & Entertainment Ltd’s turnaround strategy is “bearing fruit,” namely in its Macau operations, says CBRE Equity Research.
The comment from analysts John DeCree and Max Marsh followed the casino firm’s Thursday release of its second-quarter results.
Melco Resorts – operator of casinos in Macau, one in the Philippine capital Manila, and several venues in the Republic of Cyprus – saw its group-wide adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) expand by 24.7 percent year-on-year in the second quarter. Macau property EBITDA grew circa 35 percent year-over-year.
Vitaly Umansky, senior analyst at Seaport Research Partners, said in a headline to his Thursday note on Melco Resorts’ performance in Macau: “Management executes well in a competitive market.”
He added: “Management has been implementing new marketing and operational enhancements to drive business and optimise costs, and the strategy is being well executed.”
For its part, CBRE stated: “In early 2024, Melco [Resorts] embarked on a turnaround, announcing significant hires across its gaming operations, identifying several key property-level capital investments to reposition its gaming floors, and implementing new marketing strategies.”
The institution added: “It appears those efforts are beginning to bear fruit.”
CBRE further noted, referring to Melco Resorts’ gross gaming revenue in the Macau market, where it runs City of Dreams, the majority-owned Studio City, Altira Macau and the Mocha chain of slot clubs: “The company’s GGR share remained relatively stable from the first quarter 2025 to the second quarter 2025, at around 15.8 percent, which is up approximately 80 basis points versus the prior year period.”
The analysts said that although the improvement “was partially helped” by “lucky VIP hold”, the institution was “encouraged by the stability of market share” for Melco Resorts in Macau.
Macau EBITDA share, Philippines and Cyprus
The memo stated: “While the rising tide of a return to higher GGR growth in Macau should lift all boats, Melco’s EBITDA growth is outpacing the broader market, likely gaining notable EBITDA share in the second quarter.”
Mr DeCree and Mr Marsh also observed the casino group had experienced “meaningful margin improvement in Macau”, up over 400 basis points from the prior year period and up approximately 130 basis points sequentially from first-quarter 2025.
They stated: “The margin expansion was driven by slightly improved operating expenses and reduced promotional reinvestment as a percentage of GGR, declining approximately 130 basis points sequentially, to circa18.1 percent.”
Player reinvestment is a term used by analysts covering the sector to refer to money that operators spend on gamblers in order to retain them as customers.
Mr Umansky of Seaport observed: “Cost controls and disciplined player reinvestment led to outsized EBITDA margin and growth in Macau.”
Though he also noted, referring to the City of Dreams Manila casino complex the Melco group runs in the Philippine capital: “Outside of Macau, Manila continues to face tough competition and a difficult local market. VIP, mass and non-gaming, all showed declines (revenue down 7 percent, EBITDA down 30 percent).”
Mr Umansky added: “Management is working on enhancing some mass offering while looking to reduce operating expenses at the property, while the sales process continues with no new updates.”
The latter was a reference to prior statements by Melco Resorts that it was considering “strategic alternatives” in relation to its City of Dreams Manila business, which might include the possibility of disposal of its interest.
Seaport stated, in relation to Melco Resorts’ European operation, spearheaded by City of Dreams Mediterranean: “In Cyprus, ramp remains slow, and the quarter was impacted by the continued strife in Israel and Ukraine.”
He added: “While revenues rose 23 percent year-on-year, expenses rose faster, leading to flattish EBITDA.”
Mr Umansky stated: “We remain of the view that the non-Macau assets are a distraction and investors do not give much credit to Melco for these investments.
“Management continues to run a process to potentially divest Manila, and we think they should do the same for Cyprus in the near term,” he added.
