First Shanghai： Maintain Galaxy Entertainment’s ＂Buy＂ rating target price of HK$ 56.08.
First Shanghai released a research report saying that Galaxy Entertainment (00027) was maintained as a "buy" rating, and its performance in the fourth quarter of 2003 met expectations with a target price of HK$ 56.08. The launch of the third phase of "Macau Galaxy" w ill help the group to increase its market share. Due to the Group’s good products and services, the most stable balance sheet in the industry, the strong executive ability of the management, and the launch of the fourth phase project of Ludang, Hengqin project and potential overseas projects in the future; The bank is full of confidence in the long-term development of the group.
First, the main points of Shanghai are as follows:
Summary of performance in the fourth quarter of 2003: Summary of performance in the fourth quarter of 2003:
Galaxy’s net income increased by 254% year-on-year and 7% quarter-on-quarter to HK$ 10.3 billion (back to 80% in the same period in 2019) . The number of VIP gambling transcoding increased by 408% year-on-year and 6% quarter-on-quarter (back to 21% in the same period of 2019); The revenue from midfield betting increased by 398% year-on-year and 5.2% quarter-on-quarter (up by 13% compared with the same period in 2019). The adjusted EBITDA of the Group increased by 1.4% from the previous month to HK$ 2.8 billion (returning to 69% in the same period of 2019), and the EBITDA rate was 27%. After deducting the influence of low winning rate, EBITDA will increase by 100 million yuan. The overall performance is in line with expectations. The balance sheet of the Group remains very stable, with net cash of HK$ 23.5 billion (the strongest in the industry). In addition, because the Group is full of confidence in its future development, it announced another special dividend of 0.30 yuan per share. The annual dividend payout ratio reached 32%, which was higher than expected.
Performance survey of "Galaxy Macau" and Star Hotel;
During the period, the net income of "Macau Galaxy" and Star Hotel increased by 7% and 2% respectively from the previous month to HK$ 8.2 billion and HK$ 1.3 billion (re turning to 88% and 47% respectively in the same period of 2019); The adjusted EBITDA was HK$ 2.57 billion and HK$ 350 million respectively (returning to 80% and 45% in the same period of 2019, respectively). The EBITDA rates were 31.4% and 28.1% respectively. The occupancy rates of Galaxy Macau and Star Hotel are 95% and 100% respectively. At the end of l ast year, the group has added catering facilities in "Macau Galaxy" and transferred the high-end midfield gambling area located in the center; And re-planning the distribution of venues in the gambling area, hoping to improve the flow of people and customer experience. The Star Hotel also has plans to update its facilities.
The update of the third and fourth phases of "Macau Galaxy";
The third phase of "Macau Galaxy" will launch a high-end hotel (with about 100 rooms) in 2025, which will be provided to very high-end midfield customers and self-operated VIP customers. The Group is also continuing to advance the construction o f the fourth phase of "Macau Galaxy", which is expected to be completed in 2027. With a development area of about 600,000 square meters, this project will introduce a number of high-end hotel brands that have entered Macao for the first time, with a 4,000-seat theater, diversified catering, retail, non-gaming facilities, gardens and water play parks. The capital expenditure in 2024 is estimated to be about 6.1 billion yuan (of which 5.1 billion yuan will be used for th e third and fourth phases of "Macau Galaxy" and the rest will be used for the renovation of other facilities.
Other points:
In the fourth quarter, the group’s market share should drop to below 18%, but due to the group’s good products and the launch of new projects in the future, it is believed that the market share will pick up in the future. It is understood that the hotel occupancy rate of the group reached 100% during the Spring Festival; The performance of the midfield business has increased by 20% compared with the same period in 2019. In order to expand overseas visitors, the group has set up offices in Tokyo and Seoul to develop overseas business, and is preparing to set up an office in Bangkok.