Jefferies: MGM China's (02282) license fee increase may cause net profit to drop by 10% next year, or there is room for review of dividend dividend policy target price of HK$19

The Zhitong Finance App learned that Jefferies released a research report saying that MGM China (02282) and parent company MGM International have finalized a new brand licensing agreement, and the term will be consistent with MGM China's current gaming management rights. The bank believes that the relevant brand licensing fees are in line with the scope of the global brand and licensing market, and are at the top of its Macau peers. The bank gave the company a “buy” rating, with a target price of HK$19.

The bank expects that, assuming other conditions remain unchanged, the increase in brand licensing fees will cause MGM China's adjusted EBITDA to drop 6% in 2026, while net profit is expected to drop 10%. Also, if the company maintains a dividend payout ratio of 50%, its dividend per share for 2026/27 will decrease accordingly, so there is room for the company to review its dividend policy.