Melco urged to sell Manila, Cyprus assets to fund Thai investment and Studio City Macau acquisition

Seaport Research Partners has advised Melco Resorts & Entertainment to divest its stakes in City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus to finance a potential investment in Thailand and fully acquire Studio City in Macau.  

Vitaly Umansky, an analyst at Seaport Research, emphasized that the asset sales would help Melco reallocate capital more effectively amid growing competition and operational challenges 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 operations in Manila face intensified competition, which has constrained growth prospects. Meanwhile, its Cyprus business has struggled due to geopolitical tensions in Russia and Israel.  

Given Melco's low valuation and high debt levels, Umansky believes that selling these assets would be a strategic move that could free up funds for other key investments.  

Melco has shown interest in developing an integrated resort in Thailand. However, Umansky noted that capital constraints might make a large-scale investment in Bangkok difficult. He suggested that Melco could consider partnering with local firms, a strategy the company previously employed in Sri Lanka, to reduce initial capital requirements and target secondary markets in Thailand.  

In Macau, Melco may face further pressure as competitors ramp up property enhancements and marketing efforts. Despite appointing new casino management last year to optimize operations, Melco's market share remained mostly unchanged at 14.8% in the third quarter and 14.7% in the fourth quarter.  

Seaport Research forecasts Macau-wide EBITDA growth of 9% in 2025, with Sands and Galaxy expected to capture more market share. Sands is completing upgrades to The Londoner Macao and Venetian Arena, while Galaxy plans to open the all-suite Capella at Galaxy Macau by mid-2025.