NextFin News - Melco International Development, the Hong Kong-listed holding company of casino operator Melco Resorts, has swung back to a full-year profit for the first time since the pandemic, reporting a net income of HKD 1.058 billion for the fiscal year ended December 31, 2025. The result, announced on Tuesday, marks a decisive reversal from the HKD 1.69 billion loss recorded in 2024, as the company capitalized on a sustained recovery in Macau’s premium mass gaming segment and the successful ramp-up of its international properties.
The return to the black was underpinned by a significant expansion in operating margins and a 25% year-over-year surge in property EBITDA, which reached USD 1.23 billion for the full year. According to the company’s filing, the flagship City of Dreams Macau remained the primary engine of growth, with gross gaming revenue (GGR) at the property rising 14% to USD 764 million. Studio City also contributed to the momentum, posting a 7% increase in GGR to USD 343 million, reflecting the broader stabilization of the Macau market where total GGR hit 247 billion patacas in 2025.
While the headline numbers suggest a robust recovery, the performance across Melco’s global portfolio was uneven. In the Philippines, City of Dreams Manila faced headwinds, with GGR plunging 26% year-over-year to USD 110 million amid intensifying competition and local market volatility. Conversely, the company’s European venture, City of Dreams Mediterranean in Cyprus, saw a 37% jump in GGR to USD 79 million, providing a necessary hedge against the fluctuations in Southeast Asian markets. The nascent operations in Sri Lanka, however, remain in a gestation phase, reporting an adjusted EBITDA loss of USD 3.9 million for the fourth quarter.
The recovery in 2025 was largely driven by a strategic pivot toward non-gaming revenue and high-margin premium mass players. Non-gaming streams grew by 31% during the year, a trend that aligns with the Macau government’s mandate for operators to diversify away from pure gambling. This shift has allowed Melco to improve its yield per visitor even as the high-roller junket business, once the industry’s backbone, remains a shadow of its former self. The company’s stock has reflected this optimism, gaining approximately 60% over the course of 2025.
Despite the strong fiscal 2025 showing, some analysts maintain a cautious stance on the sustainability of these margins. Vitaly Umansky, a senior analyst at Seaport Research Partners who has long covered the Macau gaming sector, noted in a recent briefing that while Melco has successfully optimized its cost structure, the increasing competition for premium mass players could lead to higher reinvestment costs. Umansky’s view, which often leans toward a data-driven, conservative assessment of operator margins, suggests that the "easy gains" from the post-pandemic reopening have likely been realized. This perspective is not yet a consensus on the sell-side, where many firms remain bullish on the continued recovery of Chinese outbound tourism.
The start of 2026 has provided further evidence of momentum, with Macau market GGR rising approximately 24% year-over-year in the first two months. Melco management indicated that the company is currently gaining market share and benefiting from higher average daily rates (ADRs) across its hotel portfolio. However, the group still faces a substantial debt load incurred during the lean years of 2020-2022. Interest-rate-driven refinancing costs remain a primary risk factor that could weigh on net profit in the coming periods, even if operating cash flow remains strong.
The divergence between Melco’s thriving Macau operations and its struggling Manila property highlights the risks of geographic diversification in the integrated resort sector. While the Cyprus expansion is beginning to pay off, the company’s ability to replicate its Macau success in newer markets like Sri Lanka remains unproven. For now, the HKD 1.058 billion profit serves as a milestone in the company’s financial rehabilitation, though the path to pre-2020 dividend levels remains contingent on further deleveraging and the continued appetite of the premium Chinese traveler.
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