GF Securities: Giving Galaxy Entertainment (00027) a “buy” rating with a reasonable value of HK$35.99 per share

The Zhitong Finance App learned that GF Securities released a research report saying that Macau's gaming boom will continue. Galaxy Entertainment (00027)'s investment in concerts, hotels, etc. has achieved remarkable results, and its market share is expected to continue to increase. The bank estimates that the company's adjusted EBITDA for 26/27 will be HK$15.175/16.034 billion, respectively. Based on the company's 26-year adjusted EBITDA, referring to comparable companies, considering Galaxy Entertainment's active layout in the gaming and non-gaming business, the balance and liability situation is better than other expo companies in Macau, and there is still a fourth phase of new properties to be developed, which is expected to bring potential growth. The bank gave the company a 26-year 10.0x EV/EBITDA (adjusted caliber EBITDA). The corresponding company's reasonable value was HK$35.99 per share, giving it a “buy” rating.

The main views of GF Securities are as follows:

Macau Gaming: Short-term impact of World Cup diversion, growth is expected to resume after the tournament is over

Macau Gaming GGR accelerated to a high double-digit year-on-year growth in June '25. Apart from being affected by typhoon weather in September, it maintained double-digit year-on-year growth in each month of the second half of the year. Macau Gaming GGR increased 9.1% year-on-year to MOP 226.782 billion in 2025. Since 2026, GGR has accumulated a cumulative year-on-year increase of 10.9% in the first five months, and the growth rate has remained in double digits. In June, due to the diversion of the World Cup, GGR fell 12.1% year on year. Macau gaming is expected to resume growth after the World Cup tournament is over in July. Looking at the number of visitors, in terms of the number of visitors, in May '26, “multiple trips a week” and “multiple trips with one visa” accounted for 28% of individual visitors to mainland China, and the opening and facilitation of customs clearance policies contributed to a significant increase in tourists. In terms of price, Macau gaming's per capita GGR is related to the VIP/midmarket income structure and wealth effect. In the short term, Hong Kong stocks still need to continue to price Hong Kong stocks and the tightening of overseas liquidity, as the lifting of the ban on Hong Kong stocks in the third quarter; in the medium to long term, as overseas liquidity pressure eases, there is room for repair in Hong Kong stock valuations. The restoration of Hong Kong stock valuations is expected to result in a year-on-year increase in Macau's GGR per capita.

Company business tracking: GGR market share increased after the epidemic, and midfielder/slot machine GGR has exceeded pre-epidemic levels

Judging from the overall performance of the gaming business, Galaxy's GGR market share has maintained an upward trend since Macau's redistributed gaming tables in 2023. The share gap with leading Sands China has further narrowed, and Galaxy's VIP/midfielder/slot machine GGR market share has increased markedly. In terms of customer acquisition strategies, the Galaxy Arena hosted concerts, which significantly increased traffic at Galaxy Properties in Macau; Capella and Gatianfeng, which officially opened in '26, drive high-end midfield crowds. Phase IV will be completed in '27, which is expected to further enhance the company's competitiveness in attracting high-end passenger traffic and carrying the needs of visitors.

Risk warning: risk of industry uncertainty, risk of tightening foreign exchange controls, risk of fluctuations in gaming net win ratio, capital expenditure and project progress risk.