GGRAsia – Melco Resorts spends nearly US$45mln buying own shares

Melco Resorts spends nearly US$45mln buying own shares

Aug 19, 2024 Newsdesk Latest News, Macau, Top of the deck

United States-listed casino group Melco Resorts & Entertainment Ltd has bought back just under 8.34 million shares of its own stock on the open market, for an aggregate consideration – before expenses – of about US$44.5 million.

The information was disclosed in a Monday filing by its Hong Kong-listed parent, Melco International Development Ltd.

Melco Resorts repurchased a total of 8,335,364 American depositary shares (ADS), each equal to three ordinary Melco Resorts shares. The deal was part of the company’s three-year, US$500-million share buyback programme announced in June 2024.

The consideration for the shares “was paid by Melco Resorts in full and in cash and financed by the group’s available liquidity sources,” according to Monday’s filing.

It added: “Melco Resorts has yet to decide whether the … shares repurchased under the share repurchase will be cancelled, or, pursuant to the laws of the Cayman Islands – being Melco Resorts’ place of incorporation –, remain as issued or be held in treasury for future re-issuance.”

“The share repurchase reflects the confidence … in Melco Resorts’ long-term strategy and growth prospects,” said the announcement.

Melco Resorts posted a second-quarter net profit attributable to shareholders of US$21.4 million, compared to a net loss of US$23.4 million a year earlier. Such profit was up 40.8 percent sequentially, from US$15.2 million in the opening quarter of 2024.

On Melco Resorts’ second-quarter earnings call last week, Lawrence Ho Yau Lung, the company’s chairman and chief executive, said it was “shocking” to see the firm’s current “share price and valuation” level, as the group’s results were “well beyond Covid, when we had zero revenue”.

“I think we’re looking at it very, very closely and it’s extremely tempting seeing these share prices because it [the valuation] just makes no sense at this stage,” stated Mr Ho.

The CEO said the firm’s “number one objective” was still debt reduction and deleveraging.

He added: “I think our balance sheet is in much better shape today than coming out of the pandemic. We’re not quite down to the pre-Covid levels yet; those are levels that we would be more comfortable with.”

Geoff Davis, Melco Resorts’ chief financial officer, also said on the call that the company saw “tremendous value in the shares”.

“We will maintain our discipline in addressing debt reduction, but at these levels, it’s very tempting. I think you’ll probably see us divert some small percentage of our free cash towards some shares repurchase at this kind of severely discounted levels from a valuation perspective,” remarked Mr Davis.