Morgan Stanley analysts Praveen Choudhary and Gareth Leung said Melco Resorts "may have to raise its dividend to support Melco International." Morgan Stanley analysts Praveen Choudhary and Gareth Leung said Melco Resorts "promised a cash outflow of HK$2.2 billion [US$283 million] to a newly won theme park project in the city of Zhongshan, Guangdong Province.
Melco Resorts said in its first quarter 2020 results that it was suspending its quarterly dividend program to "preserve liquidity" amid business disruptions caused by the COVID-19 pandemic.
Hong Kong-listed Melco International also suspended its dividend program at the time.
Melco Resorts operates a casino in Macau in Manila, Philippines, and is an exclusive licensing partner of the Republic of Cyprus.
Morgan Stanley said Melco International's dividend from Melco Resorts was HK$1.4 billion in 2019 and "is expected to be HK$1 billion in 2022" assuming the dividend program will be restored by then.
In a note on Wednesday, Morgan Stanley noted that as of the end of 2020, Melco International's net debt, excluding commitments at Melco Resorts, was HK$6.7 billion, with "no real assets."
Morgan Stanley therefore said the "extra cash commitment" of about HK$2.2 billion for Zhongshan was "not small."
Melco's commitment will be 150 million yuan ($23.2 million) for land acquisition and 250 million yuan ($23.2 million) for project development, according to Melco International's Wednesday announcement on plans to work with a Hong Kong-listed mainland real estate developer.
Melco International will also support the construction and pre-opening costs of the theme park, which has a budget of more than 1.45 billion yuan, as well as the ongoing operating costs of the site.
According to a recent research paper by two Macau gaming law experts, the Macau government can now seek in-kind benefits other than licensing fees and taxes from a Macau casino company that wants to participate in a new open bidding process related to the 2022 expiration of six gaming licenses in the country.
This could include investment proposals in the Guangdong-Hong Kong-Macao Taiwan region, the paper's authors said.
On Wednesday, brokerage Sanford C. Bernstein Ltd said the new bid for the Macau gaming rights was likely the cause of Melco Resorts, and would be helped by its parent company's project in Zhongshan.
BY: 홀짝게임
