Seaport Research Urges Melco Resorts to Sell Manila and Cyprus Assets for Thailand and Macau Investments

Seaport Research Partners has recommended that Melco Resorts & Entertainment divest its stakes in City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus to generate capital for potential investment in Thailand and to fully acquire Studio City in Macau.

Vitaly Umansky, an analyst at Seaport Research, stressed that selling these assets would allow Melco to better reallocate capital in the face of increasing competition and operational difficulties outside Macau.

"Outside Macau, the Philippines continues to generate cash but lacks real growth dynamics due to increasing Manila competition, while Cyprus has been a disappointment,” Umansky wrote.

Melco’s Manila operations have struggled to sustain growth due to intensified competition in the city’s gaming sector. Meanwhile, its Cyprus business has faced difficulties largely due to geopolitical tensions stemming from Russia and Israel, further impacting performance.

With Melco’s current low valuation and high debt levels, Umansky sees the sale of these assets as a strategic decision that could provide much-needed funds for other major investments.

The company has expressed interest in developing an integrated resort in Thailand, though Umansky pointed out that Melco’s financial constraints could make a large-scale project in Bangkok difficult. He suggested that Melco might explore partnerships with local firms to reduce its initial capital burden, similar to the strategy it previously used in Sri Lanka. Additionally, targeting secondary markets in Thailand could provide a more feasible entry point.

In Macau, Melco is likely to face growing pressure from competitors investing heavily in property enhancements and marketing initiatives. Despite appointing new casino management last year in an effort to improve operations, Melco’s market share saw little change, standing at 14.8% in the third quarter and 14.7% in the fourth quarter.

Seaport Research projects that EBITDA growth across Macau will reach 9% in 2025, with Sands and Galaxy expected to expand their market dominance. Sands is currently upgrading The Londoner Macao and Venetian Arena, while Galaxy plans to introduce the all-suite Capella at Galaxy Macau by mid-2025.

By fLEXI tEAM