The Zhitong Finance App learned that Citi released a research report saying that Galaxy Entertainment (00027)'s net revenue for the second quarter of this year fell 2% year on year to HK$11.835 billion, and adjusted EBITDA fell 5% year on year to HK$3.38 billion, which is generally in line with the bank's and market expectations. The Group was affected by “bad luck” in gaming during the period, reducing EBITDA by about HK$21 million; if this factor is excluded, the adjusted normalized EBITDA margin improved 0.9 percentage points to 31.4% year-on-year. The board of directors declared an interim dividend of HK$0.9 per share (HK$0.7 in the same period last year), with an implied dividend ratio of about 75% (approximately 58% in the same period last year). Citi thought it was a positive surprise. The bank maintains a “buy” rating with a target price of HK$44.
Citi pointed out that VIP room gaming revenue fell 32% year on year to HK$1,636 billion, mainly affected by a 4% year-on-year drop in betting volume and a lower win rate (3.1%); midfield gaming revenue rose 8% year over year to HK$9.473 billion, driven by a 28% increase in win rate, but was partially offset by a 3% year-on-year drop in betting amount. The Group's second-quarter gaming market share remained roughly flat at around 20.3%. Among them, Galaxy Macau's adjusted EBITDA fell 4% year on year to HK$3.199 billion. Excluding the “bad luck” factor, normalized EBITDA rose 10% year on year.
Management revealed that Macau's gaming revenue performance was under pressure during the World Cup, but it recovered after the tournament ended and continued until August. The Group is focusing on the fourth phase of the development project (which aims to be completed in 2027), which will provide facilities such as approximately 1,350 guest rooms and suites and a 5,000-seat theater. As of the end of June, the Group held approximately HK$37.7 billion in cash and liquid investments, and net cash of approximately HK$35.9 billion. The balance sheet remained strong.