CICC has reiterated its 2026 and 2027 EBITDA forecasts for MGM CHINA (02282). The current share price implies a valuation of 6 times 2026 estimated EV/EBITDA. The firm maintains an "Outperform" rating and a target price of HK$16.10, corresponding to 8 times 2026 estimated EV/EBITDA. This target suggests a potential 23% upside from the current share price.

Key points from CICC's analysis include:

MGM CHINA's fourth-quarter 2025 adjusted EBITDA exceeded Visible Alpha consensus estimates. The company reported net revenue of HK$9.617 billion (up 21% year-on-year and 13% quarter-on-quarter), reaching 169% of fourth-quarter 2019 levels. Adjusted EBITDA stood at HK$2.753 billion (up 29% year-on-year and 16% quarter-on-quarter), recovering to 177% of fourth-quarter 2019 levels and surpassing the Visible Alpha consensus estimate of HK$2.449 billion. The performance was primarily driven by continued outperformance in the premium segment, with total gaming revenue at MGM Cotai and MGM Macau recovering to 214% and 104% of fourth-quarter 2019 levels, respectively.

In the fourth quarter of 2025, MGM CHINA entered into a new long-term brand agreement with MGM Resorts International (MGM.US). The brand usage fee increased from 1.75% to 3.5% of monthly net revenue, effective from 2026 for a 20-year term, payable monthly. The annual cap on brand usage fees is fixed year by year. For 2026, the cap is set at $188 million (compared to a $60 million cap for 2025). Under the new agreement, MGM Resorts International will receive 66.7% of the brand fee economic benefits, while Ms. Pansy Ho will receive 33.3%. The new fee structure and annual cap are expected to have a significant adverse impact on net profit, potentially reducing CICC's forecasted net profit by approximately 14%.

Management indicated during the earnings call that hotel bookings for the 2026 Chinese New Year holiday (starting February 17, 2026) are strong, and pre-holiday business performance remains solid.

Risk factors include a slower-than-expected recovery pace and potential market share loss due to intensified industry competition.