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新濠国际发展(00200.HK)：FY18盈利超预期 受益于MORPHEUS酒店放量

City of Dreams International Development (00200.HK): FY18 earnings exceeded expectations and benefited from MORPHEUS Hotel sales

中金公司 ·  Apr 1, 2019 00:00  · Researches

2018 performance exceeded expectations

Melco International Development disclosed results for fiscal 2018: adjusted EBITDA rose 10.7 per cent year-on-year to HK $10.9 billion, while net profit rose 10.2 per cent year-on-year to HK $522.6 million, exceeding CICC expectations by 5 per cent. Melco Resorts and Entertainment Ltd (MLCO.US), a subsidiary of Melco International Development, previously disclosed its results for fiscal year 2018 on February 19, 2019, with an adjusted EBITDA of US $1.478 billion.

We believe that the growth of Melco International Development (200.HK) has benefited from: 1) the continued volume expansion of the Morpheus Hotel since its opening on June 15, 2018; 2) the completion of the renovation of the City of Dreams Macau and the end of the business disruption; and 3) the continued growth of the midfield business in Macau, which is conducive to Melco, which focuses on the midfield business.

Trend of development

On January 1, 2019, Melco won the approval of 40 new midfield gaming tables from the Macau government with the opening of the Morpheus Hotel.

Melco International Development announced a 2018 final dividend of HK $2.35 per share (vs 2017: HK $4), with a total dividend of HK $6.85 per share for 2018 (vs 2017: HK $6.2), reflecting the company's dividend policy of 20 per cent dividend yield.

Profit forecast

We keep our MLCO.US revenue and profit forecasts unchanged. Accordingly, we expect 200.HKFY19e/20e revenue of HK $43.1 billion / HK $44.2 billion and adjusted EBITDA of HK $11.8 billion / HK $12.3 billion, given that FY18's performance exceeded expectations.

Valuation and suggestion

We maintain a neutral rating on Melco Resorts and Entertainment Ltd (MLCO.US) and a target price of $19.80, corresponding to 10x FY19e EV/EBITDA. Accordingly, we maintain a neutral rating on City International Development (200.HK), but raise the target price by 5 per cent to HK $16.80, corresponding to a 30 per cent discount to net assets, which is 8.7 per cent lower than the current share price.

Risk

Increased competition has led to the loss of market share.

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