Morgan Stanley downgraded its rating from Overweight to Equal-weight for MGM China (02282.HK). The move was made citing the higher royalty payments to parent MGM Resorts. These payments are anticipated to lower the future earnings of the Chinese subsidiary. The Morgan Stanley analysts further note that royalty payments would rise to 15% of EBITDA in 2026. At the same time, the company’s profit margin is likely to shrink by 220 basis points, which equals 2.2 percentage points, year-on-year.
Morgan Stanley’s downgrade came after MGM Resorts International (NYSE: MGM) announced a long-term agreement with MGM China Holdings Limited.
According to the official announcement published on December 23, MGM Resorts has entered into a Branding Agreement with MGM China Holdings Limited. The agreement extends through the current Macau concession in 2032 and potentially until 2045 if a new concession is granted. The agreement secures MGM China’s continued use of the MGM brand, which has helped nearly double its market share from about 9% pre-pandemic to around 16% as of September 2025. Under the new terms, the monthly license fee rises from 1.75% to 3.5% of adjusted net revenues, subject to an annual cap, with MGM Resorts receiving roughly two-thirds of the fee. The long-term branding agreement will be effective from January 1, 2026.
MGM China (02282.HK) closed at 12.910, shedding 17.14% today. Yet, the MGM China stock recorded a 30.8% return year-to-date (YTD). The analyst’s price target for the next 12 months is 19. As for the competitors, Morgan Stanley has upgraded the rating for GALAXY ENT (00027.HK) from Equalweight to Overweight. Sands China Ltd (01928.HK) also holds a Buy/Strong Buy consensus. Among the Macau peers of MGM China, Galaxy Entertainment doesn’t pay any royalties. MGM China also underwent an executive leadership restructuring in the past week, with the appointment of Kenneth Feng as new CEO.
Even though the Chinese subsidiary’s stock experienced a double-digit slump, MGM Resorts International (MGM) posted gains on Friday (26/12/2025).
MGM International Resorts Post Gains
MGM International stock closed at 37.68, 1.59% up. The stock posted 8.7% year-to-date. The company has a market cap of 10.306 billion as of December 26. The analysts from JP Morgan and Morgan Stanley maintain a ‘Hold’ rating for MGM International Resorts. Yet, the analyst from Citigroup maintains a ‘Strong Buy’ with 26.06% upside. The analyst’s price target for the next 12 months is around 42.33.
In the latest earnings report, Las Vegas–headquartered casino and resort operator reported that consolidated net revenues increased about 2% year-over-year in the third quarter of 2025. The company posted a diluted loss per share of around –$1.05, with adjusted EPS of $0.24, down from $0.54 in the prior year quarter, reflecting a significant decline in profitability.
The company’s peers Wynn Resorts, Limited (WYNN), and Las Vegas Sands Corp.(LVS)
posted 44. 34% and 28.895 % gains Year-to-date (26/12/2025), while Caesars Entertainment, Inc. (CZR) recorded 25.82% decline.
