Melco unlikely to resume quarterly dividend payments until 2024, analysts say

Analysts at Moody’s Investors Service Inc say the casino operator’s earnings and financial leverage are likely to remain weak until 2023.

Macau.- Melco Resorts and Entertainment Ltd‘s recovery will be slower than expected, according to Moody’s Investors Service Inc. Analysts say the company may only resume quarterly dividend payments in 2024.

Payments were suspended during the first quarter of the year 2020 to preserve the company’s liquidity.

Melco Resorts & Entertainment has recently reported a reduction of first-quarter net losses from US$232.9m to US$183.3m year-on-year. However, operating revenue was US$474.9m, down 8.5 per cent year-on-year and down 1.2 when compared to the previous quarter.

Meanwhile, Melco Resorts’ debt is likely to increase to around US$8.1bn by year-end 2022 due to the additional expenses incurred during the Covid-19 pandemic.

Moody’s has lowered its predictions for Macau’s GGR levels for 2022 and 2023 to around 40 per cent and 80 per cent of 2019 levels respectively. They say Macau’s mass-market GGR could fully recover by 2024 but that VIP revenue is unlikely to recover significantly because of junket closures.

Moody’s also published a report on Studio City Finance Ltd, the promoter of the Studio City casino resort in Macau. It said weak operating cash flow coupled with capital spending for the phase-two project will drive a further increase in debt this year.

Analysts stated: “We expect Studio City Finance’s capital spending to peak at around US$550m this year, mainly reflecting its Studio City phase-two expansion. The company’s capital spending will likely decline substantially in 2023 once the phase-two project is expected to be completed by the end of this year.”