Melco Resorts & Entertainment (MLCO.O): Prudent Cost Control and a Likely Market Share Increase in Oct

MLCO reported largely in-line 3Q26 property EBITDA of US$288m. Management alludes the recent weakness in Macau industry GGR to a basket of factors but does not view it as indicative of a structural downturn. Against this challenging industry backdrop, MLCO recorded QoQ decline in both player reinvestments and opex, thanks to management's prudent cost control. More encouragingly, management indicates that operating trends improved in October following changes to its salesforce in August and September. Management lowers its FY26E and FY27E capex guidance. Deleveraging remains a higher priority than share buyback and dividend resumption (still targets a dividend reinstatement by end-FY27E). Per management, it will continue repurchasing shares if the stock stays at the current valuation levels. We maintain our Buy rating on MLCO (with unchanged TP of US$6.80) as we expect City of Dreams to regain market share with the opening of REM. 3Q26 revenue fell 10% YoY to US$1,174m, with adjusted pr