Melco Could Reap $600 Million Windfall by Selling Manila Casino, Says Analyst
Posted on: January 23, 2026, 10:40h.
Last updated on: January 23, 2026, 11:01h.
- Lawerence Ho’s company previously said it’s examining alternatives for City of Dreams Manila
- If analyst’s $600 million forecast proves accurate, that’s roughly 25% of the company’s current market capitalization
- Analyst says stock is inexpensive and selloff is “overdone”
Lawrence Ho’s Melco Resorts (NASDAQ: MLCO) could command a significant windfall if it opts to sell its City of Dreams Manila integrated resort.
Texas Capital analyst David Bain initiated coverage of the casino stock on Friday with a “buy” rating and a price target of $11.50, implying upside of 84% from where the shares reside at this writing. In his report to clients, the analyst says Melco could command nearly $600 million in a sale of the Philippines’ integrated resort.
We believe MLCO could garner close to $600M should it sell its Manila operations, which could reduce net leverage close to 3.5x by the end of 2026,” observes the analyst. “While Manila has become more competitive, the market has stabilized, in our view. Should MLCO’s strategic review of its Manila IR result in a sale, we believe it could reduce leverage by a ~half a turn.”
In February 2025, the gaming company hired CBRE Capital Advisors, Inc. and Moelis & Company LLC to explore strategic alternatives for City of Dreams Manila. Three months later, the operator said that review is advancing, but a transaction has yet to materialize. If Melco were to divest the Manila casino hotel for $600 million, those gross proceeds would represent nearly a quarter of the company’s market capitalization of $2.48 billion.
Melco Stock in Bear Market, but Shares are Cheap
Since December 1, Melco stock is off 35%, putting it in a deep bear market, but that slide has affirmed the notion that the shares are deeply discounted relative to Macau-centric peers. The special administrative region (SAR) accounts for 85% of the operator’s business.
Bain notes Melco trades at a 31% enterprise value/earnings before interest, taxes, depreciation, and amortization (EBITDA) discount to its Macau peers, and that’s saying something because even with some recent strength in the group, Macau casino stocks are considered undervalued. He notes above-average leverage and not having a US headquarters while the stock trades in New York are among the headwinds confounding the stock.
Should Melco sell City of Dreams Manila, it could use those proceeds to reduce debt, potentially to levels investors view as more inviting. Additionally, the operator’s Macau exposure should turn into a catalyst for the stock.
“Based on our conversations with checks and operators, the visitor demographic in Macau has broadened post-COVID, with more looking for non-gaming experiences as well as gaming floor action,” says Bain. “Due to multiple amenities, discussed below, we believe MLCO is positioned above peers to leverage its 4,500+ premium room base located in Cotai, Macau to drive higher value overnight visitation.”
Melco Ex-Macau Operations Attractive
Outside of Macau and Manila, Melco does business in Cyprus and Sri Lanka. City of Dreams Mediterranean is the operator’s casino hotel in Cyprus, and while some analysts have previously suggested the operator part with that venue as well, Bain doesn’t see things that way.
He notes that property, in which Melco has a 75% stake, had its best EBITDA result in the third quarter of 2025 and could be boosted by increased visitation by Russian tourists if the war with Ukraine ends.
“We believe Cyprus and Sri Lanka create asset-light value, and Cyprus has EBITDA momentum,” concludes the analyst.
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