HK Stock Market Move | MGM China (02282) rebounds nearly 5% as licensing fees increase, dragging down profits. Goldman Sachs believes that the recent stock price adjustment is excessive.

MGM CHINA (02282) rebounded nearly 5%, as of press time, up 4.74% to HK $12.82, with a turnover of HK $1.1 billion. On the news side, on December 23, MGM International Hotel Group announced a new long-term brand cooperation agreement with MGM CHINA. Starting from 2026, MGM CHINA will increase the brand usage fee paid to its parent company from 1.75% to 3.5%. Morgan Stanley estimates that the brand usage fee in 2026 will reach HK $1.2 billion, significantly higher than the HK $600 million in 2025. Goldman Sachs issued a research report estimating that MGM CHINA's EBITDA will be impacted by about 6% to 7% due to the additional franchise fee paid to its parent company. This will lead to a reduction in profit forecast by about 13% to 14%. It is expected that if the company maintains a dividend payout ratio of around 50%, this could result in a decrease in dividends per share. After the announcement of the franchise fee-related news, MGM CHINA's stock price fell by about 19%. The bank believes that the recent stock price adjustment seems somewhat excessive.