Melco Resorts & Entertainment could generate a substantial cash infusion if it moves forward with a sale of its City of Dreams Manila property, according to a new analyst report. The company, led by Lawrence Ho, previously confirmed it is evaluating strategic alternatives for the Philippine integrated resort.
Texas Capital analyst David Bain initiated coverage of Melco (NASDAQ: MLCO) on Friday with a “buy” rating and an $11.50 price target, suggesting roughly 84% upside from current levels. Bain estimates the operator could fetch close to $600 million for its Manila operations—an amount equal to nearly 25% of Melco’s $2.48 billion market capitalization.
“We believe MLCO could garner close to $600 million should it sell its Manila operations, which could reduce net leverage to roughly 3.5x by the end of 2026,” Bain wrote. He added that while competition in Manila has intensified, the market has stabilized, and a sale could trim Melco’s leverage by “about half a turn.”
Melco hired CBRE Capital Advisors and Moelis & Company in February 2025 to conduct a strategic review of City of Dreams Manila. The company said in May that the process is progressing, though no deal has been announced.
Stock Under Pressure, but Analyst Sees Value
Melco shares have fallen 35% since December 1, placing the stock firmly in bear‑market territory. Bain argues the selloff has gone too far, noting Melco now trades at a 31% EV/EBITDA discount to its Macau‑focused peers—despite the fact that Macau casino stocks themselves remain undervalued.
Macau accounts for 85% of Melco’s business, and Bain believes the region’s post‑pandemic recovery will ultimately serve as a catalyst for the stock. He also cites Melco’s premium room inventory—more than 4,500 high‑end rooms in Cotai—as a competitive advantage as Macau’s visitor base shifts toward a broader mix of gaming and non‑gaming travelers.
Beyond Macau: Cyprus and Sri Lanka Add “Asset‑Light” Value
Melco also operates in Cyprus and Sri Lanka, and Bain views these markets as incremental value drivers rather than divestiture candidates. City of Dreams Mediterranean in Cyprus, where Melco holds a 75% stake, delivered its strongest EBITDA performance in the third quarter of 2025. Bain notes the property could benefit further if Russian tourism rebounds following a resolution of the war in Ukraine.
“We believe Cyprus and Sri Lanka create asset‑light value, and Cyprus has EBITDA momentum,” Bain concluded.
