Melco Resorts to raise dividends on behalf of Melco International

Melco Resorts & Entertainment may raise its dividend payout to help its parent company, Melco International Development as it needs to fund its shares for the development of an entertainment complex in Zhongshan.

Macau.- According to a note from Morgan Stanley banking group, Melco Resorts & Entertainment could raise its dividend payout to help Melco International Development fund plans for a non-gaming complex in Zhongshan in China’s Guangdong province.

Analysts said Melco Resorts had an HKD$2.2bn (US$283m) cash outflow commitment to the non-gaming complex.

After sharing its results for the first quarter of the year 2020, Melco Resorts said it was suspending its quarterly-dividend programme to “preserve liquidity” mainly due to struggles caused by the Covid-19 pandemic.

Morgan Stanley reported in 2019 that Melco International received dividends by Melco Resorts of HKD$1.4bn and expects a dividend of HKD$1.0bn in 2022 if the dividend programme is reinstated.

As of the end of 2020, Melco Resorts had HKD$6.7bn net debt “with no real assets”, so an additional cash commitment of almost HKD$2.2bn regarding the Zhongshan complex “is not small.”

During the first quarter of 2021, Melco Resorts & Entertainment reported that income came in at US$520m. That represents a decrease of 36 per cent in comparison with the US$810m produced during the same period of 2020.

Net loss attributable to Melco Resorts & Entertainment for the first quarter of 2021 was US$232.9m, or US$0.49 per ADS, compared with a net loss of US$364m, or US$0.76 per ADS, in the first quarter of 2020.

According to Sanford C. Bernstein, the Zhongshan complex will benefit Melco Resorts with several longer-term impacts since it displays the company’s commitment to developing non-gaming in the greater Macau area.

Macau’s current casino licences will expire in June 2022 but could be extended for up to five years under the city’s gaming laws.