Challenging Times Still Ahead 有挑战性的时期还在将来

股

票

研 [Table_Title] Company Report: Melco Resorts & Entertainment (MLCO US) Noah Hudson

究 (86755) 2397 6684 EquityResearch 公司报告：新濠博亚 (MLCO US) [email protected]

19 November 2020 [Table_Summary] Challenging Times Still Ahead 有挑战性的时期还在将来

 Melco's 3Q2020 normalized adjusted property EBITDA loss was US$89 Rating:[Table_Rank ] Sell 公 million, down 120.3% yoy but up 50.0% qoq. 3Q2020 total revenue was Maintained 司 greater than expected as the Company took market share in Macau. For Macau operations only, casino net revenue was US$149 million, down 90.2% 评级：卖出 (维持) 报 yoy, which was better than the Macau sector gross gaming revenue (GGR) 告 decline of 93.1% during the quarter. 6[Table_Price-18m TP目标价] : US$14.00 CompanyReport  We expect Melco's adjusted property EBITDA to turn to positive in Revised from 原目标价: US$10.40 4Q2020, and forecast 2020-2022 adjusted property EBITDA of -US$139 million, US$743 million and US$1.100 billion, respectively. We forecast ADR price ADR价格: US$18.450

net losses of US$1.331 billion and US$295 million in 2020 and 2021, respectively, and positive net income of US$33 million in 2022. We forecast 2020-2022 fully diluted earnings per ADS (EPADS) of -US$2.189, -US$0.620 Stock performance and US$0.070, respectively. With the uncertainty brought by the COVID-19 股价表现 pandemic, Melco's management did not give an estimate on expected [Table_QuotePic] opening dates for Studio City Phase 2 or for City of Dreams Mediterranean. 60 % change In the meantime, City of Dreams Manila continues to operate at very limited 50 40

capacity, and Melco's operations in Cyprus have been forced to close at night 30

证 due to government imposed curfews. 20 券告 10  We increase our target price from US$10.40 to US$14.00; maintain 0

报 "Sell" investment rating. Our target price is equivalent to 16.2x and 10.4x

研 (10)

2021 and 2022 EV/adjusted EBITDA, respectively, and is an 18.0% discount (20)

究究

to our DCF derived NAV per share of US$17.07. (30)

报 (40)

 研新濠博亚 2020 年第 3 季度标准化赢率下经调整物业 EBITDA 亏损为 8,900 万美元，同比 (50)

告下降 120.3%但环比上升 50.0%。由于公司在澳门抢占了市场份额，2020 年第 3 季度总收 (60)

券 Nov-19 Jan-20 Feb-20 Apr-20 May-20 Jul-20 Aug-20 Oct-20 Nov-20

入好于预期。仅就澳门业务而言，赌场净收入为 1.49 亿美元，同比下降 90.2%，好于澳 EquityResearch Report NASDAQ COMP Index Melco Resorts & Ent.

门全行业博彩总收入在该季度 93.1%的下跌。证

[Tab  我们预计新濠博亚经调整物业 EBITDA 在 2020 第 4 季度转正，并预计 2020 至 2022 年

经调整 EBITDA 分别为-1.39 亿美元、7.43 亿美元和 11 亿美元。我们预计 2020 年和 2021 Change[Table_PriceChange] in ADR Price 1 M 3 M 1 Y

le_I 年净亏损分别为 13.31 亿美元和 2.95 亿美元，2022 年则为 3,300 万美元的净利润。我们股价变动 1 个月 3 个月 1 年预计 2020 至 2022 年每股美国存托凭证全面摊薄收益分别为-2.189 美元、-0.620 美元和 Abs. % nfo1 12.2 (11.8) (18.6) 0.070 美元。由于新冠肺炎疫情带来的不确定性，新濠博亚管理层并没有给出新濠影汇二绝对变动 % 博 ] 期或者地中海新濠天地预计开业日期的预测。此外，马尼拉新濠天地继续维持有限水平的 Rel. % to NASDAQ Index 13.0 (18.8) (57.5) 相对纳指变动 %

彩 Sector 营运，而新濠博亚在塞浦路斯的物业也因政府实施宵禁而被迫晚上关闭。 Avg. ADR price(US$) 16.7 17.3 17.9 行平均股价（美元）  我们将公司目标价由 10.40 美元上调至 14.00 美元并维持“卖出”的投资评级。我们的目 Source: Bloomberg, Guotai Junan International. 业标价分别相当于 2021 年 16.2 倍和 2022 年 10.4 倍的 EV/经调整 EBITDA，并相对我们运

Gaming 用折现现金流方法得出的每股估值 17.07 美元有 18.0%的折让。

[Tab le_I [Table_

Year End Turnover Net Profit Earnings/ADR Earnings/ADR PER BV/ADR PBR DP ADR Yield ROE nfo2 年结Profit ] 收入股东净利每份 ADR 净利每份 ADR 净利变市盈率每份 ADR 市净率每份 ADR 股息率净资产收益率 12/31 (US$ m) (US$ m) (US$) (△ %)动 (x) 净资产(US$) (x) (US$)股息 (%) (%) ] 2018A 5,189 340 0.678 (4.4) 27.2 4.575 4.0 0.560 3.0 13.1 新 2019A 5,737 373 0.779 14.9 23.7 5.093 3.6 0.640 3.5 15.8 濠中 2020F 1,554 (1,331) (2.787) (457.8) n.a. 1.524 12.1 0.000 0.0 (84.0) 博 3,292 (296) (0.620) n.a. n.a. 1.223 15.1 0.000 0.0 (45.1) 外 2021F 2022F 4,259 33 0.070 n.a. 263.6 1.657 11.1 0.000 0.0 4.9 亚运 [Table_BaseData]ADR in issue (m) 总 ADR 数 (m) 477.0 Major shareholder 大股东 Melco Intl. Development Ltd. 51.3% 输 Market cap. (US$ m) 市值 (US$ m) 8,800.7 Free float(%) 自由流通比率(%) 37.5 3 month average vol. 3 个月平均成交股数(‘000) 3,331.0 FY20 Net gearing (%) FY20 净负债/股东资金 (%) 428.7 52 Weeks high/low (US$) 52 周高/低 (US$) 25.220 / 10.810 FY20 Est. NAV (US$) FY20 每 ADR 估值（美元） 17.1

Source : the Company, Guotai Junan International. Melco Resorts & Entertainment (MLCOUS) MelcoResorts Entertainment &

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[Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

3Q2020 RESULTS

] 1 r a M t h g i R _ e l b a T [

Melco Resorts & Entertainment's ("Melco", or the "Company") 3Q2020 total revenue was greater than expected as the Company took market share in Macau. For 3Q2020, Melco’s total casino net revenue was US$171 million, down 86.3% yoy; for Macau operations only, casino net revenue was US$149 million, down 90.2% yoy, which was better than the Macau sector gross gaming revenue (GGR) decline of 93.1% during the quarter. Total revenue was US$213 million, down 85.2% yoy. Total non-casino revenue was US$42 million, down 78.6% yoy, which helped partially offset the sharper declines in gaming revenue.

The decrease in total revenue was mostly due to the sector decline resulted from COVID-19 travel restrictions which continued 19 November2020 to have a significant negative impact on Macau visitation and gaming revenue. The negative impact was partially offset during the quarter with the partial resumption of Melco's casino operations in Manila and Cyprus, as well as the resumption of visa issuance to mainland Chinese under the Individual Visit Scheme (IVS) which started in late Sept.

Melco’s VIP turnover from its Macau casinos was US$2.35 billion, down 90.2% yoy, which was better than the Macau sector VIP GGR decline of 92.5% yoy during the quarter. Melco's Macau only VIP gross win decreased by 88.7% yoy to US$78 million, benefitting from a somewhat higher-than-normal VIP win rate of 3.30% (vs. expected range of 2.85%-3.15%). Including Philippines and Cyprus operations, Melco’s total VIP turnover decreased 89.0% yoy to US$2.91 billion, and VIP gross win decreased 87.0% yoy to US$93 million, with VIP win rate of 3.18%, which was just slightly above the normal expected range of 2.85%-3.15%.

] 2 r a M t h g i R _ e l b a T [

Melco’s mass market (tables and slots) GGR from its Macau operations was US$71 million, down 91.5% yoy, which was better than the Macau mass sector GGR decline of 93.6% yoy during the quarter. Melco’s total mass market GGR was US$127 million, down 87.1% yoy.

Table-1: Melco's Financial Results (MLCO US)

US$ mn (unless indicated otherwise) 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 qoq yoy (% or ppt) (% or ppt)

Gaming Net Revenue 1,242 1,249 713 148 171 15.7% (86.3%)

Total Net Revenue 1,439 1,451 811 176 213 21.1% (85.2%) 新濠博亚

Shareholders' Net Income / (loss) 83 68 (364) (368) (332) 9.9% (498.6%)

Earnings per ADR, basic (US$) 0.174 0.142 (0.761) (0.772) (0.695) 9.9% (500.3%)

Earnings per ADR, diluted (US$) 0.173 0.142 (0.761) (0.173) (0.696) 302.3% (502.3%)

Adjusted Property EBITDA*

City of Dreams 233 210 61 (70) (49) 30.1% (121.1%)

Altira Macau 14 14 (9) (19) (17) 13.3% (219.9%)

Mocha Clubs 6 6 0 4 (0) (110.2%) (107.2%)

City of Dreams Manila 50 54 30 (23) 5 n.a. (89.6%) Melco Resorts & Entertainment

Studio City 106 117 (9) (42) (22) 48.7% (120.4%)

Cyprus Operation 9 9 3 (6) 6 n.a. (26.3%)

Total Adjusted Property EBITDA* 418 409.8 75.3 (156) (77) 50.9% (118.4%)

Hold Normalized Adj. Property EBITDA 439 413 12 (178) (89) 50.0% (120.3%)

Adjusted Property EBITDA Margin by Property* City of Dreams 29.6% 27.7% 13.0% (66.7%) (53.8%) 12.9 ppt (83.4) ppt

Altira Macau 12.3% 12.0% (17.1%) (114.3%) (153.1%) (38.8) ppt (165.5) ppt

Mocha Clubs 21.3% 20.5% 0.4% 19.0% (4.0%) (23.0) ppt (25.3) ppt

City of Dreams Manila 38.2% 35.1% 26.8% (313.3%) 12.0% 325.3 ppt (26.2) ppt

Studio City 31.5% 32.8% (6.9%) (388.5%) (70.6%) 317.9 ppt (102.1) ppt

Cyprus Operation 32.0% 35.0% 17.0% (171.1%) 30.7% 201.8 ppt (1.3) ppt

Total Adjusted Property EBITDA Margin* 29.1% 28.2% 9.3% (88.9%) (36.0%) 52.8 ppt (65.1) ppt

Hold Normalized Adj. Property EBITDA Margin** 30.5% 28.5% 1.5% (101.2%) (41.8%) 59.4 ppt (72.3) ppt Source: the Company, Guotai Junan International.

Note: *Adjusted Property EBITDA is earnings before interest, taxes, depreciation, amortization, pre-opening costs, development costs, property charges and Report other, share-based compensation, payments to the Philippine parties under the cooperative arrangement (the “Philippine Parties”), land rent to Belle Corporation and other non-operating income and expenses. **Hold Normalized Adjusted Property EBITDA is an estimate from the Company. Melco calculates hold normalization using the normalized VIP win rate of 3.00%,

which reflects the midpoint of the expected VIP rolling chip win rate of 2.85% and 3.15%.

Company

See the last page for disclaimer Page 2 of 8 [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

Operating loss was US$275 million, compared to operating income of US$175 million in 3Q2019 and operating loss of

US$371 million in the prior quarter. The greatest expense was casino expense, which ] as1 a r percentagea M t h ofg totali R net_ revenuee l b a T [

was 97.3%, up 40.1 ppt yoy but down from 122.7% from the previous quarter. The second greatest expense was depreciation and amortization, which as a percentage of total revenue increased by 52.9 ppt yoy to 62.7%, down from 76.8% from the prior quarter. Depreciation and amortization costs were US$153.5 million, of which US$14.4 million related to Melco's gaming subconcession amortization expense, and US$5.7 million related to land use rights amortization expense.

Normalized adjusted property EBITDA loss was US$89 million, down 120.3% yoy and up 50.0% qoq. Adjusted property 19 November2020 EBITDA loss was US$76.7 million, up 50.9% from the previous quarter but down by 118.4% yoy. A favorable company-wide VIP win rate of 3.18% resulted in a US$12 million increase in adjusted property EBITDA. To exclude the 'luck' factor, the quarterly fluctuations in VIP win rate, Melco reports a hold normalized adjusted property EBITDA using the VIP win rate of 3.00%, which reflects the midpoint of the expected VIP win rate of 2.85% and 3.15%.

Shareholders’ net loss was US$332 million, compared to shareholders' net income of US$83 million in 3Q2019 and shareholders' net loss of US$368 million in the previous quarter. Loss per ADS was US$0.695. Total net non-operating expenses was US$110.3 million, which mainly consisted of interest expense net of amounts capitalized of US$91.9 million and US$18.5 million loss on debt extinguishment.

] 2 r a M t h g i R _ e l b a T [

Melco’s overall Macau market share increased by 6.9 ppt yoy and decreased by 23.8 ppt qoq to about 24.3%. Melco's Macau VIP market share increased by 8.7 ppt yoy and decreased by 52.0 ppt qoq to about 26.5%. Melco’s mass market share in Macau increased by 5.3 ppt yoy and increased by 0.6 ppt qoq to 22.4%.

Figure-1: Melco’s Macau Market Share Figure-2: Melco’s Macau VIP and Mass Market Share

VIP Mass (Tables & Slots)

(MLCO US)

53% 48.1% 88% 78.5% 48% 78%

43% 68% 新濠博亚 38% 58% 33% 48% 28% 24.3% 21.3% 38% 23% 17.4% 25.0% 26.5% 16.9% 28% 18% 17.8% 16.2% 18% 13% 21.8% 22.4% 17.1% 17.5% 17.9% 8% 8%

3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 Melco Resorts & Entertainment Source: the Company, Gaming Inspection and Coordination Bureau Macao Source: the Company, Gaming Inspection and Coordination Bureau Macao SAR. SAR.

Outlook

With the uncertainty brought by the COVID-19 pandemic, Melco's management did not give an estimate on expected opening dates for Studio City Phase 2 or for City of Dreams Mediterranean. Upon opening of Studio City Macau phase 2, Studio City Macau will have about 900 additional luxury hotel rooms and suites, one of the world’s largest water parks, a Cineplex and state-of-the-art MICE space. When City of Dreams Mediterranean in Cyprus eventually opens, it will be Europe’s largest integrated resort with about 500 luxury hotel rooms, a 1,500-seat amphitheater and approximately 10,000 square meters of MICE space.

Previously, the Company’s management had given guidance that City of Dreams Mediterranean in Cyprus was expected to Report open around the end of 2021. However, most recently, the Company management indicated that the COVID-19 pandemic had impacted construction work at both Studio City Phase 2 and City of Dreams Mediterranean. However, we think the critical

factor is not construction delays but is the COVID-19-induced uncertainty of when easing of travel and gaming demand will Company recover enough in both Macau and in Europe to support the opening of Studio City Phase 2 and City of Dreams Mediterranean.

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oPpRtMsNoQqOmQsOsQtOpO8OcM7NsQrRmOnNfQpOoPjMnMzQ9PmNuNxNqMqNxNoNrM [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

We expect that the opening of Studio City Phase 2 in Macau and City of Dreams Mediterranean in Cyprus will be

delayed until gaming demand recovers to around 2019 levels, which could be 2023 ] or 1 evenr a later,M t inh ourg i view.R _ e l b a T [

City of Dreams Manila continues to operate at very limited capacity. As previously reported, City of Dreams Manila was closed on 16 March along with all casinos in Metro Manila Philippines. However, from 19 June, the Philippines gaming authority, PAGCOR, allowed City of Dreams Manila to open its gaming and hospitality operations with a limited number of participants strictly adhering to COVID-19 health and social distancing requirements mandated by the Philippines government. The limited

partial opening is expected to continue until PAGCOR gives formal notice that City of Dreams Manila can go back to normal 19 November2020 operations, the timing of which is highly uncertain.

Melco's operations in Cyprus have been forced to close at night due to government imposed curfews. Starting from 23 October, the Cyprus government imposed city wide curfews from 11 p.m. to 5 a.m. in the cities where Melco's casino operations are located (Limassol and Paphos). On November 5, the Cyprus government extended the curfew throughout the rest of Cyprus and the curfew is currently expected to be in place through 30 November 2020, with the possibility of being further extended. As a result, Melco's operations in Cyprus are required to be closed during those hours while the curfew remains in effect. With COVID-19 cases increasing in many regions throughout the globe, we think that the Cyprus curfew could be extended past 30 November, or that casinos might be forced to close down completely for some period of time.

] 2 r a M t h g i R _ e l b a T [

We expect Melco's adjusted property EBITDA to turn to positive in 4Q2020. During their 2Q2020 earnings call this past August, the Company's management had indicated that Melco's Macau operations could reach break-even adjusted property EBITDA if Melco's GGR revenue were to increase to about 30% to 35% of what it was before the COVID-19 pandemic. However, since then, Melco has been able to find ways to reduce costs and expenses while also increasing its proportion of revenue from higher margin offerings. With these improvements, the Company’s management now expects Macau operations

to reach break-even adjusted property EBITDA when GGR revenue increases to around 25% to 29% of pre-COVID-19 levels. (MLCO US) Melco's 3Q2020 Macau GGR was equivalent to just 9.8% of its 3Q2019 GGR. However, during October, the Company's adjusted property EBITDA increased to slightly positive, even with a lower-than-expected VIP win rate and bad debt expense of

about US$10 million. We expect Melco's GGR to continue to increase in the coming months and that adjusted property EBITDA 新濠博亚 and adjusted property EBITDA margin will continue to steadily increase going forward as long as revenue continues to grow.

Forecast Revisions

We increase Melco’s 2020 and 2021 revenue forecasts by 2.2% and 43.7%, respectively, and decrease 2022 revenue forecast by 12.0%. We forecast 2020-2022 total net revenue of US$1.55 billion, US$3.29 billion and US$4.26 billion,

respectively, representing growth of -72.9%, 111.9% and 29.3%. Melco's 3Q2020 revenue was higher than expected as the Melco Resorts & Entertainment Company took market share in Macau. Melco's GGR market share in Macau hit an all time high of 21.8% in 2Q2020, and further increased to 22.4% in 3Q2020. With the local COVID-19 epidemic expected to remain under control in China, we increase Melco's 2020 and 2021 revenue forecasts, but we expect the growth to be somewhat mitigated since we think it will be difficult for Melco to continue gaining market share in Macau in 4Q2020 and beyond; Melco may even lose market share as competitor Sands China is expected to open new attractions and facilities at its newly rebranded the Londoner and other properties. With the opening of both City of Dreams Mediterranean in Cyprus and Studio City phase 2 in Macau delayed, we lower our 2022 revenue forecasts.

We forecast 2020-2022 adjusted property EBITDA of -US$139 million, US$743 million and US$1.100 billion, respectively. Our forecasts reflect 2020-2022 adjusted property EBITDA margin of -9.0%, 22.6% and 25.8%, respectively, compared to Melco's all-time annual high adjusted property EBITDA margin of 29.4% reached in 2019. We forecast net losses of US$1.331 billion and US$295 million in 2020 and 2021, respectively, and positive net income of US$33 million in 2022. We forecast 2020-2022 fully diluted earnings per ADS (EPADS) of -US$2.189, -US$0.620 and US$0.070, respectively. Like the

other casino operators in Macau, Melco will continue paying staff costs during the COVID-19 downturn. Depreciation costs will Report weigh down profitability in 2021 and 2022 even as the sector continues to recover.

Company

See the last page for disclaimer Page 4 of 8 [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

Table-2: Melco Forecast Revisions

US$ mn Old New ] 1 r a M t h %g Changei R _ e l b a T [

(Except EPADS) 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

Total net revenue 1,521 2,291 4,840 1,554 3,292 4,259 2.2% 43.7% (12.0%)

Adjusted Property EBITDA (628) 166 1,123 (139) 743 1,100 77.8% 347.6% (2.1%) Adj. property EBITDA margin (41.3%) 7.2% 23.2% (9.0%) 22.6% 25.8% 32.3 ppt 15.4 ppt 2.6 ppt

Net Profit (2,023) (893) 11 (1,331) (296) 33 34.2% 66.9% 204.3%

Net profit margin (133.0%) (39.0%) 0.2% (85.6%) (9.0%) 0.8% 47.4 ppt 30.0 ppt 0.6 ppt 19 November2020

EPADS, basic (US$) (4.232) (1.876) 0.023 (2.787) (0.620) 0.070 34.1% 66.9% 204.9% EPADS, diluted (US$) (4.232) (1.876) 0.034 (2.189) (0.620) 0.070 48.3% 66.9% 106.3% Source: Guotai Junan International.

Figure-3: Melco’s Net Revenue Figure-4: Melco's Adj. Property EBITDA

Total Net Revenue Growth(R) Adj. EBITDA Growth(R) US$ mn US$ mn 111.9% 6,000 5,189 5,737 120% 2,500 180% 4,259 2,000 1,689 4,000 3,292 80% 1,486 120%

] 2 r a M t h g i R _ e l b a T [

1,500 1,100 1,554 1,000 2,000 29.3% 40% 743 60% 10.6% 13.7% -1.8% 500 4.5% 48.0% - 0% - 0%

(500) (139) (2,000) -40% -60% (1,000) (1,500) (4,000) -72.9% -80% -120%

(2,000) -108.2% (MLCO US)

(6,000) -120% (2,500) -180% 2018A 2019A 2020F 2021F 2022F 2018A 2019A 2020F 2021F 2022F

新濠博亚

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Valuation

We increase our target price from US$10.40 to US$14.00; maintain "Sell" investment rating. Our target price is equivalent to 16.2x and 10.4x 2021 and 2022 EV/adjusted EBITDA, respectively, and is an 18.0% discount to our DCF derived NAV per

share of US$17.07. Melco Resorts & Entertainment

Table-3: Melco DCF Valuation

Risk Free Rate 0.69% Sum of PV FCFF (US$ mn) 7,093 Market Return 10.12% + PV Terminal Value (US$ mn) 6,051 Market Risk Premium 9.44% Enterprise Value (US$ mn) 13,144 Adj. Beta 1.0 - Net Debt/(cash) (US$ mn) 4,993 Equity Discount Rate 10.12% Total NAV (US$ mn) 8,151 ADR Outstanding (mn) 477.4 After Tax Cost of Debt 6.9% NAV per ADR (US$) 17.07 D/(D+E) 60.0% E/(D+E) 40.0% WACC 8.2%

Long term growth rate 3.0% Report Source: Bloomberg, the Company, Guotai Junan International.

Company

See the last page for disclaimer Page 5 of 8 [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

Table-4: Gaming Sector Peers Comparison

] 1 r a M t h g i R _ e l b a T [

Company Stock Crncy Price M-Cap PE EV/Adjusted EBITDA PBR ROE Yield

Code (mn) Bn Hist Avg. 20F 20F 20F

(HK$) 19A 20F 21F Fwd* Fwd* 19A 20F 21F (%) (%)

Macau

Galaxy Entertain 00027 HK HKD 61.700 268.0 20.5 n.a. 30.0 14.8 n.a. 15.4 n.a. 20.6 4.0 (5.5) 0.2

Melco Reso-Adr MLCO US USD 18.450 68.2 23.7 n.a. 82.7 10.5 14.4 10.7 n.a. 11.8 8.2 (60.0) 0.2

Mgm China 02282 HK HKD 11.260 42.8 22.2 n.a. 55.5 12.3 n.a. 11.2 n.a. 13.7 8.8 (66.0) 0.1

Sands China Ltd 01928 HK HKD 34.050 275.5 17.3 n.a. 27.4 15.1 n.a. 15.7 n.a. 18.2 17.0 (41.6) 1.2 19 November2020

Sjm Holdings Ltd 00880 HK HKD 9.390 53.3 16.6 n.a. 41.5 15.1 n.a. 12.6 n.a. 17.7 2.2 (11.4) 0.6

Wynn Macau Ltd 01128 HK HKD 13.700 71.2 14.0 n.a. 34.9 12.9 n.a. 13.4 n.a. 15.3 n.a. 338.6 0.0

Simple Avg. 21.1 n.a. 45.3 12.7 14.4 12.5 n.a. 15.5 7.1 25.7 0.3

Weighted Avg. 18.9 n.a. 36.3 14.3 14.4 14.5 n.a. 17.9 9.6 4.7 0.5

USA

Boyd Gaming BYD US USD 36.050 31.2 25.9 n.a. 16.4 10.8 7.7 8.5 11.8 7.3 3.7 (2.1) 0.2

Caesars Entertai CZR US USD 63.800 103.0 61.3 n.a. n.a. 12.4 11.6 11.0 30.0 11.7 3.3 (51.4) 0.0

Las Vegas Sands LVS US USD 57.330 339.5 16.4 n.a. 36.0 14.2 23.5 12.8 n.a. 17.1 14.1 (32.7) 1.5

Mgm Resorts Inte MGM US USD 26.910 103.0 6.9 n.a. n.a. 20.3 21.2 6.5 n.a. 15.8 1.7 (21.5) 0.6

] 2 r a M t h g i R _ e l b a T [ Penn Natl Gaming PENN US USD 67.170 80.9 176.8 n.a. 44.4 8.2 16.7 10.1 16.7 11.5 3.9 (28.7) n.a.

Wynn Resorts Ltd WYNN US USD 95.640 80.0 83.2 n.a. n.a. 15.2 24.1 14.9 n.a. 17.0 n.a. (344.3) 1.0

Simple Avg. 61.7 n.a. 32.3 13.5 17.5 10.6 19.5 13.4 5.4 (80.1) 0.7

Weighted Avg. 46.6 n.a. 22.1 14.1 20.2 11.4 22.4 15.1 8.8 (65.8) 1.0

Other

Bloomberry Res BLOOM PM PHP 8.500 14.9 9.4 n.a. 30.2 14.5 61.9 2.0 61.9 10.7 2.6 (17.5) 2.2

(MLCO US) Belle Corp BEL PM PHP 1.600 2.5 5.8 32.0 8.9 6.1 15.2 5.4 15.2 7.1 0.5 n.a. 8.8

Simple Avg. 7.6 32.0 19.6 10.3 38.6 3.7 38.6 8.9 1.6 (17.5) 5.5

Weighted Avg. 8.9 32.0 27.2 13.3 55.2 2.5 55.2 10.2 2.3 (17.5) 3.2 新濠博亚 Source: Bloomberg, the Company, Guotai Junan International. Note: * "Hist Avg. Fwd" is the average forward valuation ratio over the past five years, taken from Bloomberg. Forward valuations are the Bloomberg consensus forward valuations which are based on the next four quarters, next two semi-annuals or next fiscal year.

Table-5: Melco Valuation and Target Price Based Multiples Next 4 2019A 2020F 2021F 2022F Quarters Target price US$14.00

Shares outstanding, period end, fully diluted (mn) 481 477 477 477 477

TP based market cap (US$ mn) 6,736 6,683 6,679 6,678 6,680 Melco Resorts & Entertainment + Period end minority interest (US$ mn) 0 0 0 0 0

+ Period end borrowings (US$ mn) 4,729 5,739 5,962 6,036 5,501

- Period end cash & equivalents (US$ mn) 1,395 736 719 713 690

Year end enterprise value (US$ mn) 10,070 11,686 11,922 12,001 11,491

Adjusted property EBITDA (US$ mn) 1,689 (139.3) 554 743 1,100

TP Based EV/Adjusted Property EBITDA 6.0 n.a. 21.5 16.2 10.4

EPS (US$), diluted 0.775 (2.1892) (1.0123) (0.6200) 0.070

Target Price Based PER 18.1 n.a. n.a. n.a. 199.6

Source: the Company, Guotai Junan International.

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Company

See the last page for disclaimer Page 6 of 8 [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

Financial Statements and Ratios

[Table_IncomeStatement] [Table_BalanceSheet] ] 1 r a M t h g i R _ e l b a T [ Income Statement Balance Sheet

Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F Total revenue 5,189 5,737 1,554 3,292 4,259 Property & equipment 5,784 5,724 6,231 6,259 6,334 Operating expenses: Gaming subconcession 198 141 99 92 86 Casino (3,001) (3,267) (1,194) (1,795) (2,346) Intangible assets 31 32 30 33 38 Rooms (78) (90) (44) (73) (78) Goodwill 82 96 87 89 94 Food & beverage (161) (181) (88) (143) (161) Prepayments & other 190 180 274 224 197 Entertainment, retail & others (92) (100) (61) (145) (73) 19 November2020 Investment securities 0 569 0 0 0 General and administrative (506) (559) (407) (396) (514) Right-of-use assets 0 111 98 78 63 Philippine parties payments (61) (57) (10) (26) (34) Land use rights 760 741 727 713 699 1Pre-opening (55) (5) (1) (2) (2) Total non-current assets 7,044 7,594 7,546 7,487 7,509 Development (23) (57) (25) (13) (18)

D&A (568) (651) (667) (691) (697) Cash & cash equivalents 1,472 1,395 736 713 690 Property charges and other (29) (21) (59) (47) (61) Restricted Cash 48 37 10 28 36 Operating profit 613 748 (1,003) (39) 273 Investment Securities 92 49 25 28 31 Interest income 5 9 5 3 3 Accounts receivable 242 284 142 163 211 Interest expenses, net (265) (310) (346) (395) (378) Inventories 41 44 39 52 67 Other expenses (15) (44) (204) (84) (84) Prepaid expense & other 183 85 84 86 93

] 2 r a M t h g i R _ e l b a T [ Profit before tax 339 403 (1,547) (515) (186) Total current assets 2,078 1,895 1,036 1,071 1,128

Income tax (0) (8) 5 (2) (2) Total assets 9,122 9,488 8,582 8,558 8,637

Profit after tax 339 394 (1,542) (517) (188) Payables & accruals 1,702 1,451 1,172 833 1,077 Non-controlling interest 1 (21) 211 221 221 ST debt 430 73 78 78 79 Shareholders' profit / loss 340 373 (1,331) (296) 33 Other ST liabilities 15 2 4 6 8

Total current liabilities 2,147 1,525 1,254 916 1,164 (MLCO US) Adjusted Property EBITDA 1,486 1,689 (139) 743 1,100

LT borrowings 3,665 4,394 5,392 5,716 5,184 Basic EPS 0.678 0.779 (2.787) (0.620) 0.070 Others 337 426 421 471 543 Diluted EPS 0.673 0.775 (2.189) (0.620) 0.070 新濠博亚 Total non-current liabilities 4,003 4,820 5,813 6,187 5,727

Total liabilities 6,150 6,345 7,067 7,103 6,891 [Table_CashFlowStatement] Cash Flow Statement

Total shareholders' equity 2,297 2,439 727 583 791 Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F Minority interest 675 704 788 872 955 Net income 339 394 (1,331) (296) 33 Total equity 2,972 3,143 1,515 1,455 1,746 D&A 564 651 586 611 617

Other non-cash adjustments 74 157 160 164 167

Changes in working capital 80 (366) (157) (353) 192 [Table_FinancialRatio] Financial Ratios Melco Resorts & Entertainment Cash from operating activities 1,057 836 (741) 126 1,010 2018A 2019A 2020F 2021F 2022F Capex (563) (471) (1,000) (550) (600) Margins Other investing (47) (561) (3) 0 (6) Operating margin (%) 11.8 13.0 (64.5) (1.2) 6.4 Cash from investing activities (610) (1,032) (1,003) (550) (606) Net profit margin (%) 6.6 6.5 (85.6) (9.0) 0.8 Adj. EBITDA margin (%) 28.6 29.4 (9.0) 22.6 25.8 Dividends paid (272) (301) 0 0 0 Repurchase of shares (656) 0 0 0 0 Return Ratios Cash from (repayment) debt 503 341 1,010 297 (535) ROA (%) 3.8 4.0 (14.7) (3.5) 0.4 Issuance (buyback) of equity 5 3 (28) (6) 2 ROE (%) 13.1 15.8 (84.0) (45.1) 4.9 Other financing activities 14 54 104 110 106 Return on capital invested (%) 5.9 7.2 (15.5) (0.6) 4.1 Cash from financing activities (405) 97 1,086 401 (427) Liquidity & leverage Cash at beg of year 1,408 1,472 1,395 736 713 Leverage (i.e., gearing) (%) 275.8 309.3 492.8 812.8 687.3 Net changes in cash 42 (99) (659) (23) (23) Net gearing (%) 179.4 215.6 428.7 713.0 596.6

Effect of foreign exchanges (11) 10 0 0 0 Interest coverage ratio (x) 2.3 2.5 (2.9) (0.1) 0.7 Changes in restricted cash 33 11 0 0 0 Current ratio (x) 1.0 1.2 0.8 1.2 1.0 Cash at end of year 1,472 1,395 736 713 690

Report

Source: the Company, Guotai Junan International.

Company

[Table_CompanyRatingDefinition]

See the last page for disclaimer Page 7 of 8 [Table_PageHeader]Melco Resorts & Entertainment (MLCO US)

Company Rating Definition

The Benchmark: NASDAQ Composite Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. 19 November2020 Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: NASDAQ Composite Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [

or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%;

Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ] (MLCO US) (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GUOTAI JUNAN I (01788 HK),JXR (01951 HK),JINSHANG BANK (02558 HK),HAITIAN ANTENNA (08227 HK),Guotai

Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this 新濠博亚 Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research Melco Resorts & Entertainment reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

Website: www.gtja.com.hk Report

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See the last page for disclaimer Page 8 of 8