Morgan Stanley has issued a research report reiterating its 'Overweight' rating on MGM CHINA (HKEX: 02282), maintaining a target price of HK$13.5.

The firm believes the recent pullback in the stock's price has made its short-term valuation more attractive, and it anticipates the share price will outperform its peers over the next 60 days.

Morgan Stanley points out that MGM China's current valuation is quite compelling, trading at approximately 6 times its projected 2026 enterprise value to EBITDA, with a free cash flow yield to shareholders of around 13%.

Additionally, the company offers a dividend yield exceeding 6%, and Morgan Stanley expects there is further room for dividend growth.

The investment bank also forecasts that MGM China's second-quarter EBITDA for this year will surpass general market expectations.

Beyond maintaining a relatively high market share, MGM China has also achieved the highest return on capital within Macau's gaming sector, reflecting its leading operational efficiency among industry peers.

Morgan Stanley assesses the probability of these positive scenarios materializing at approximately 80% or higher, categorizing it as "very likely" to occur.