Lyon: MGM China (02282) raised parent company license fees and reduced target price to HK$20.9

The Zhitong Finance App learned that Lyon released a research report saying that MGM China (02282) will raise the license fee ratio to its parent company MGM International (MGM.US) to 3.5% starting in 2026, which is higher than 3% for Wynn Macau (01128) and 1.5% for Sands China (01928). The bank lowered MGM's target price in China from HK$22.6 to HK$20.9, maintaining the “outperforming the market” rating. Galaxy Entertainment (00027) and MGM China are preferred in the industry because of their strong cash flow and balance sheets that allow the company to immediately increase dividends according to its own wishes.

Although the bank believes that the relevant measures will not affect MGM China's property EBITDA, it still lowered its 2026 and 27 adjusted EBITDA forecast by 6.3 to 6.7%, while maintaining the expected payout ratio of 50%, that is, HK$0.71 and HK$0.81 for 26 and 27, respectively.