MELCO CROWN ENTERTAINMENT: Post-pandemic competition among licensed gaming companies in Macau intensifies, continuously affecting profit margin improvement

Melco Resorts & Entertainment (MLCO.US) released its Q3 2025 results last weekend, and the group's chairman and CEO, Ho Yau Lung, stated that competition among licensed gaming companies in Macau has intensified post-pandemic, continuously affecting the substantial improvement of profit margins, even offsetting the positive impact that the decline in intermediary business might bring.

He believes that competition in the Macau market has stabilized but remains quite fierce. He reiterated his views on some competitors adopting aggressive strategies in recent years, stating that when the VIP rooms and intermediary businesses disappeared, everyone had hoped for a sharp increase in profit margins, but contrary to expectations, he pointed out that if the six licensed operators could work together, considering the market is growing, profit margins should improve. Although the peak period of market competition has passed, everyone is still trying to seize market share.

Ho Yau Lung also urged competitors and sell-side analysts to possibly reduce their focus on weekly and monthly market share to avoid feeling pressured to chase market share.

Evan Winkler, president and managing director of Melco's parent company Melco International Development (00200.HK), stated that the group would not be influenced by competitors' actions, especially after Sands China (01928.HK) recently announced it would adopt a more aggressive strategy. Melco will reinvest "by project and by player group," continuously assessing execution.

Winkler mentioned that regarding the progress of smart gaming table installations, attendees also inquired with the Melco management team, especially after Las Vegas Sands Group announced it was adopting a new method to calculate expected win rates following the baccarat theoretical win rate rising to a new high of 4.2% for the quarter ending September 2025, after operating smart gaming tables at Marina Bay Sands in Singapore for a year. However, Macau has not followed suit yet. Melco agreed, stating that the current target win rate for baccarat business is 3%. From the data, in terms of business groups and player betting combinations, the relevant figures remain ideal