Selected Unaudited 2025 First Quarter Financial Data 8th May, 2025 Mr. Francis Lui Yiu Tung, Chairman of GEG said: "Today I am pleased to report solid results for GEG in Q1 2025. During the quarter we continued to drive every segment of the business in particular the premium mass through our unparalleled products and service, ongoing property enhancements, diverse entertainment shows and events, as well as the full implementation of smart tables, among others. In Q1 2025 the Group reported Net Revenue of $1 ...

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company has shown steady performance in Q1, with a 11% year-on-year increase in visitor numbers to Macau and a 9% quarter-on-quarter increase. The total gaming revenue in Macau for Q1 was HKD 56 billion, reflecting a 1% year-on-year growth [1] - The company is confident in its long-term prospects, as evidenced by plans to increase the dividend payout ratio to 50% and distribute a final dividend of HKD 0.5 per share in June 2025 [2] - The opening of the Capella hotel is expected to attract high-end customers, enhancing the luxury hotel experience in Macau [3] Financial Performance Summary - Q1 net revenue reached HKD 11.2 billion, a 6.2% year-on-year increase, with gaming and non-gaming segments contributing HKD 8.9 billion and HKD 1.6 billion respectively [1] - The adjusted EBITDA for Q1 grew by 16.3% to HKD 3.3 billion, with an EBITDA margin of 29.4%, up by 2.6 percentage points year-on-year [1] - Revenue projections for 2025-2027 are estimated at HKD 46.1 billion, HKD 50.0 billion, and HKD 54.7 billion respectively, with year-on-year growth rates of 6.1%, 8.5%, and 9.3% [3][4] Market Position and Events - The company has increased its market share during the May Day holiday, with a series of events planned for Q2 expected to drive demand further [2] - Upcoming major events include concerts by BTS and G-Dragon, which are anticipated to positively impact Q2 performance [2] Valuation Metrics - The current market capitalization corresponds to a 9.7x EV/EBITDA for 2025, indicating a favorable valuation [3] - Financial ratios such as P/B are projected to decrease from 2.0 in 2023 to 1.5 by 2027, suggesting improving value over time [4][11]

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company has shown steady performance in Q1, with a 6.2% year-on-year increase in net revenue to HKD 11.2 billion, driven by a significant increase in visitor numbers and entertainment events in Macau [1][2] - The opening of the Capella hotel is expected to attract high-end customers and set a new benchmark for luxury hotels in Macau, enhancing the company's appeal to ultra-high-net-worth individuals [3] - The company plans to increase its dividend payout ratio to 50%, reflecting confidence in its long-term prospects [2] Financial Performance Summary - Q1 visitor numbers in Macau increased by 11% year-on-year and 9% quarter-on-quarter, with a 64% increase in traffic attributed to major entertainment events [1] - Q1 adjusted EBITDA grew by 16.3% to HKD 3.3 billion, with an EBITDA margin of 29.4%, up 2.6 percentage points year-on-year [1] - Revenue projections for 2025-2027 are estimated at HKD 46.1 billion, HKD 50.0 billion, and HKD 54.7 billion, representing year-on-year growth rates of 6.1%, 8.5%, and 9.3% respectively [3][4] Market Position and Events - The company has increased its market share during the May Day holiday, with a series of events expected to drive demand in Q2, including concerts and international competitions [2] - The company is set to host several high-profile events, including concerts by BTS and G-Dragon, which are anticipated to further boost performance [2] Valuation Metrics - The current market capitalization is approximately HKD 140.2 billion, with an EV/EBITDA multiple of 9.7x for 2025 estimates [4][5] - The projected return on equity (ROE) is expected to improve from 10.1% in 2023 to 14.6% by 2027 [11]

Investment Rating - The investment rating for the company is "Buy" [5][6] Core Views - The company's performance in Q1 2025 met expectations, with total gaming revenue reaching HKD 10.94 billion, a year-on-year increase of 13.6% [5] - The company has seen a significant increase in market share, with VIP and mass market gaming revenue growing by 52.3% and 7.6% respectively [5] - The opening of the Capella hotel in early May is expected to attract high-end consumers, with over 50% of guests being direct VIP customers [5] - The company forecasts revenue growth for 2025-2027, with total revenue projected at HKD 48.27 billion in 2025, HKD 51.38 billion in 2026, and HKD 53.17 billion in 2027 [5][6] Financial Projections - Total revenue (in million HKD) for 2024A, 2025E, 2026E, and 2027E is projected to be 43,432.0, 48,273.2, 51,381.2, and 53,165.0 respectively, with year-on-year growth rates of 21.7%, 11.1%, 6.4%, and 3.5% [6] - Adjusted property EBITDA (in million HKD) is expected to be 12,187.6 for 2024A, 14,248.0 for 2025E, 15,667.8 for 2026E, and 16,136.9 for 2027E, with growth rates of 28.3%, 31.4%, 11.1%, and 2.0% respectively [6] - The diluted earnings per share (in HKD) are projected to be 2.00 for 2024A, 2.65 for 2025E, 3.09 for 2026E, and 3.17 for 2027E [6] Market Data - The closing price of the stock is HKD 32.00, with a market capitalization of HKD 139,997 million [3][4] - The stock has a price-to-book ratio of 1.84 and a current EV/Adjusted Property EBITDA of 10.24 for 2024A, decreasing to 7.74 by 2027E [4][6]

Core Viewpoint - Galaxy Entertainment reported first-quarter revenue of HKD 11.2 billion, slightly below the forecast of HKD 11.22 billion [1] Company Summary - The company's first-quarter revenue was HKD 11.2 billion, which indicates a minor shortfall compared to market expectations [1]

Business Strategy and Market Position - Galaxy Entertainment Group aims to become Asia's leading gaming and entertainment company, leveraging its understanding of local markets and Chinese culture as a competitive advantage[5]. - The company has a clear positioning as a leading operator of integrated gaming and leisure facilities, focusing on demand-driven strategies[6]. - The group has a strong financial performance, being a constituent of the Hang Seng Index since June 2013, indicating its market significance[14]. - Galaxy Entertainment's strategic partnership with Monte-Carlo SBM was established in 2017, enhancing its international presence[17]. - The company is focusing on enhancing its resorts with new dining and retail options to maintain competitiveness and customer appeal[85]. - The company is committed to creating sustainable value for shareholders and stakeholders through long-term growth strategies[118]. - The company is committed to sustainable development, implementing initiatives such as replacing all guest and team member buses with new energy vehicles and installing more electric vehicle charging stations and solar panels[181]. Financial Performance - The group's net revenue reached HKD 43.4 billion, an increase of 22% year-on-year[38]. - Adjusted EBITDA for the group was HKD 12.2 billion, up 22% year-on-year[39]. - Shareholders' profit attributable to the group was HKD 8.8 billion, reflecting a 28% year-on-year increase[38]. - Non-gaming revenue amounted to HKD 6.4 billion, a year-on-year increase of 18%[39]. - The group maintained a strong balance sheet with cash and liquid investments totaling HKD 31.3 billion, net of liabilities of HKD 4.2 billion[41]. - The total revenue from non-gaming activities for 2024 is HKD 6.4 billion, up 19% year-on-year[69]. - The group’s gaming win rate remains stable at 2.9% for 2024, with a total turnover of HKD 180.9 billion[69]. - The company achieved a total dividend payout of HKD 1.00 per share for the fiscal year ending December 31, 2024, combining the interim and proposed final dividends[177]. Development and Expansion - The third phase of Galaxy Macau™ officially opened in December 2023, adding around 1,100 hotel rooms and a convention space of 40,000 square meters[21]. - The Galaxy Macau™ has expanded significantly with the opening of its third phase in 2023, covering a total area of 1.4 million square meters[28]. - The upcoming Galaxy Capella is set to open in mid-2025, featuring around 100 luxury sky villas and suites[34]. - The fourth phase of development will expand the resort by an additional 600,000 square meters, increasing total hotel supply to approximately 7,500 rooms and suites[35]. - The company plans to invest over HKD 33 billion in non-gaming projects to enrich Macau's tourism offerings, supporting its vision to become a world tourism and leisure center[89]. - The ongoing Phase 4 project will introduce several high-end hotel brands to Macau, with a capacity of up to 5,000 seats in a theater and various non-gaming facilities, targeted for completion in 2027[91]. Corporate Social Responsibility - The company has invested approximately HKD 13 billion to establish the Galaxy Entertainment Group Foundation, enhancing its corporate social responsibility initiatives[15]. - Galaxy Entertainment has committed HKD 200 million to support various pandemic prevention efforts in mainland China and Macau as of July 2020[18]. - The Galaxy Entertainment Group Foundation was established with a commitment of HKD 1.3 billion to support youth education and development in Macau and mainland China[36]. - The company has received awards for community engagement initiatives, including the "Community Integration Excellence Award" and "ESG Reporting Model Award" for its volunteer activities[184]. Awards and Recognition - Galaxy Macau™ was awarded "Best Integrated Resort" at the IAG Academy IR Awards in September 2024, highlighting its market leadership[22]. - The company received the "Best Integrated Resort in Asia" award from Travel + Leisure Luxury Awards 2024 for "Galaxy Macau"[59]. - "Galaxy Hotel™" ranked fourth in the "Best Hotel" category at the Macau Best Hotel Awards[59]. - "Banyan Tree Spa Macau" was awarded first place in the "Best Hotel Spa" category at the Macau Best Hotel Spa Awards[59]. - "Galaxy Macau" won the "Energy Saving Concept Award" at the Macau Energy Saving Activity 2023[59]. - "Galaxy Hotel™" received the Gold Award at the Macau Environmental Hotel Awards[60]. - "Andaz Macau" was recognized as a "Special Recommendation for Newly Opened Hotels" in the 2023 China Top 100 Hotels[60]. - "Galaxy Macau" was awarded the "Most Favorite Integrated Resort" at the Travel Awards 2024[60]. Governance and Management - The board of directors is composed of three executive directors, one non-executive director, and four independent non-executive directors, ensuring a balanced and effective governance structure[123]. - The company adheres to a high standard of corporate governance, focusing on effective risk management and internal controls to protect shareholder rights[117]. - The company has established an audit committee since 1999, consisting of four members, mostly independent non-executive directors, to oversee financial reporting and risk management systems[136]. - The company has implemented a structured delegation of authority to various committees to streamline responsibilities and enhance governance[134]. - The company is committed to hiring and retaining top management and employees to strengthen its gaming and hotel executive team[113]. - The company emphasizes the importance of independent judgment and sufficient commitment from non-executive directors in the selection process[145]. Visitor and Event Management - The company hosted approximately 460 performances and events in 2024, including major events like the UFC Fight Night and the International Table Tennis Federation World Cup[51]. - The Galaxy International Convention Center and Galaxy Arena are positioned to capture the growing trend of entertainment events, with an estimated ticket sales revenue of MOP 1.1 billion from 240 concerts in 2023[51]. - International visitor numbers to Macau are expected to increase by 66% year-on-year to 2.4 million in 2024[51]. - The central government has expanded the list of cities eligible for the Individual Visit Scheme to 59, covering a population of about 500 million[52]. Operational Efficiency - The introduction of electronic gaming tables across all casinos is anticipated to enhance operational efficiency and customer management[53]. - The company is evaluating a series of upgrades at the StarWorld Hotel, including enhancements to the gaming floor and dining options[53]. - The company aims to enhance operational efficiency in the gaming and entertainment business through continuous development of management talent[116]. - The internal audit department conducts regular independent evaluations of the risk management and internal control systems to provide assurance to the board[160].

Investment Rating - The investment rating for Galaxy Entertainment is "Buy" (maintained) [1] Core Views - The company's performance exceeded expectations, and there is optimism for continued growth in 2025, particularly in EBITDA profit margins [5] - The recovery in gaming revenue is attributed to non-gaming activities such as concerts, which have attracted high-net-worth clients [5] - The company is exploring upgrades for its hotel offerings to enhance revenue generation [5] Financial Projections - Total revenue is projected to grow from HKD 35,684 million in 2023 to HKD 53,525.8 million by 2026, reflecting a compound annual growth rate (CAGR) of approximately 6.3% [1][6] - Adjusted property EBITDA is expected to increase from HKD 9,955 million in 2023 to HKD 16,663.4 million in 2026, with a significant year-on-year growth of 34.5% in 2024 [1][6] - The earnings per share (EPS) is forecasted to rise from HKD 1.56 in 2023 to HKD 3.24 in 2026 [1][6] Market Position - The company achieved a total gaming revenue of HKD 110.3 billion in Q4 2024, recovering to 76.3% of the levels seen in Q4 2019 [5] - The market share for the company's mass gaming segment increased to 22.5%, while the overall gaming market share rose to 19.8% [5] - The company is expected to maintain stable operating costs, which will support profit margin recovery to pre-pandemic levels [5]

Investment Rating - The report maintains a "Buy" rating for Galaxy Entertainment [1] Core Views - The company's performance exceeded expectations, and there is optimism for continued EBITDA margin improvement in 2025 [5] - The recovery in gaming revenue is attributed to non-gaming activities, such as concerts, which have attracted high-net-worth clients [5] - The company is exploring upgrades for its hotel offerings to enhance revenue generation [5] Financial Projections - Total revenue is projected to grow from HKD 35,684 million in 2023 to HKD 53,525.8 million by 2026, reflecting a compound annual growth rate (CAGR) of approximately 6.3% [1][6] - Adjusted property EBITDA is expected to increase from HKD 9,955 million in 2023 to HKD 16,663.4 million in 2026, with a significant growth rate of 20.6% in 2025 [1][6] - The earnings per share (EPS) is forecasted to rise from HKD 1.56 in 2023 to HKD 3.24 in 2026 [1][6] Market Position - The company achieved a total gaming revenue of HKD 110.3 billion in Q4 2024, recovering to 76.3% of the Q4 2019 level [5] - The market share for the company's mass gaming segment increased to 22.5%, while total gaming revenue market share rose to 19.8% [5] - The company is expected to maintain stable operating costs, contributing to improved profit margins [5]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 47.25, representing a potential upside of 48.11% from the current stock price of HKD 31.90 [1]. Core Insights - The company's Q4 2024 performance met expectations, with a year-to-date low double-digit growth forecast. The net revenue for Q4 was HKD 11.29 billion, recovering to 87.1% of the 2019 level, with a year-on-year increase of 9.4% and a quarter-on-quarter increase of 5.9% [2][3]. - The introduction of smart gaming tables and the launch of new products, particularly the Capella Hotel and Resort, are expected to enhance market share. The company has a strong balance sheet with net cash of HKD 27.1 billion, the strongest in the industry [2][3]. Financial Summary - Total net revenue is projected to grow from HKD 35.68 billion in 2023 to HKD 55.18 billion by 2027, reflecting a compound annual growth rate (CAGR) of 10.3% [2][3]. - EBITDA is expected to increase from HKD 9.96 billion in 2023 to HKD 16.89 billion in 2027, with an EBITDA margin improving from 27.9% to 30.6% over the same period [2][3]. - Net profit is forecasted to rise from HKD 6.83 billion in 2023 to HKD 12.62 billion in 2027, with a net profit margin increasing from 19.1% to 22.9% [2][3]. Operational Highlights - The company reported a strong performance in its flagship properties, with net revenues for Galaxy Macau and StarWorld Hotel increasing by 12% and 3% year-on-year, respectively [2]. - The occupancy rates for Galaxy Macau and StarWorld Hotel were reported at 98% and 100%, respectively, indicating robust demand [2]. - The company is advancing its development projects, including the introduction of the Capella Hotel and Resort in mid-2025 and the ongoing construction of the fourth phase of Galaxy Macau, expected to be completed by 2027 [2][3].

Financial Performance - Adjusted EBITDA for the year reached HKD 12.2 billion, an increase of 22% year-on-year[2] - Net profit attributable to shareholders for the year was HKD 8.8 billion, up 28% year-on-year[2] - The group's total net income for the year was HKD 43.4 billion, an increase of 22% year-on-year[12] - In Q4, the group's net income was HKD 11.3 billion, up 9% year-on-year and 6% quarter-on-quarter[12] - Q4 adjusted EBITDA was HKD 3.2 billion, a 15% increase year-on-year and a 10% increase quarter-on-quarter[12] - The company reported a net profit of HKD 8,814,404 thousand for the year ended December 31, 2024, compared to HKD 6,873,976 thousand in 2023, which is an increase of 28.2%[29][31] - The company reported a pre-tax profit of HKD 8,759,247 for 2024, up from HKD 6,827,956 in 2023, indicating a growth of 28.4%[38] - The group's net revenue for 2024 was HKD 43.43 billion, a year-on-year increase of 22%[46] - Adjusted EBITDA for 2024 was HKD 12.19 billion, reflecting a 22% year-on-year growth[47] Visitor Statistics - The number of international visitors to Macau increased by 66% year-on-year to 2.4 million[3] - The number of visitors to Macau in 2024 was 34.9 million, a 24% increase year-on-year, recovering to 89% of 2019 levels[44] - The total number of international visitors to Macau increased by 66% from 1.5 million in 2023 to 2.4 million in 2024[44] Cash and Investments - Total cash and liquid investments amounted to HKD 31.3 billion, with a net amount of HKD 27.1 billion after deducting liabilities of HKD 4.2 billion[3] - Cash and liquid investments as of December 31, 2024, amounted to HKD 31.3 billion, with a net amount of HKD 27.1 billion after deducting liabilities[12] - Cash and cash equivalents rose significantly to HKD 20.39 billion in 2024, up from HKD 14.51 billion in 2023, marking an increase of 40.4%[16] - The company maintains a net cash position as of December 31, 2024, with no leverage ratio reported[81] Dividends - The board proposed a final dividend of HKD 0.50 per share, reflecting confidence in the long-term prospects of Macau and the group[3] - The board proposed a final dividend of HKD 0.50 per share, expected to be distributed around June 2025[12] - The company declared a special dividend of HKD 0.30 per share, totaling HKD 1,311,091, compared to HKD 0.20 per share in 2023[36] - The company declared a final dividend of HKD 0.50 per share, totaling approximately HKD 21.90 billion, to be paid in June 2025[43] - The total dividend for the year ending December 31, 2024, will be HKD 1.00 per share, combining the interim and proposed final dividends[89] Assets and Liabilities - Total assets increased to HKD 94.58 billion in 2024 from HKD 87.22 billion in 2023, representing a growth of 8.5%[16] - Total liabilities as of December 31, 2024, were HKD 18,186,407, an increase from HKD 15,998,364 in 2023[33] - The company’s total liabilities increased to HKD 18.19 billion in 2024 from HKD 15.99 billion in 2023, reflecting a rise of 13.7%[16] - Total equity increased to HKD 76.39 billion in 2024 from HKD 71.22 billion in 2023, an increase of 7.7%[16] Gaming Operations - Total revenue for the gaming operations business reached HKD 41,145,377 thousand in 2024, up from HKD 31,722,235 thousand in 2023, representing a growth of 29.5%[25] - Net revenue from gaming operations after commissions and incentives was HKD 33,826,345 thousand in 2024, compared to HKD 27,289,868 thousand in 2023, an increase of 24.1%[25] - The total gaming revenue for 2024 reached HKD 41.15 billion, up 30% compared to the previous year[46] - Adjusted EBITDA for the gaming and entertainment segment was HKD 11,462,329 thousand for the year ended December 31, 2024, compared to HKD 9,417,222 thousand in 2023, reflecting a growth of 22%[29] Non-Gaming Initiatives - The company is focusing on developing non-gaming businesses in the fourth phase of its Cotai project, targeting entertainment and family-friendly facilities[12] - The company plans to invest over HKD 33 billion in non-gaming initiatives to enrich Macau's tourism offerings under the new gaming license[72] - The ongoing Phase 4 project will introduce several high-end hotel brands to Macau, a theater with up to 5,000 seats, diverse dining, retail, non-gaming facilities, and is targeted for completion in 2027[74] Operational Developments - The introduction of electronic gaming tables across all venues is expected to enhance operational efficiency and customer management[6] - The company is progressing with the internal renovations and Phase 4 development of Galaxy Macau, focusing on non-gaming facilities[6] - The Galaxy International Convention Center and Galaxy Theatre are undergoing upgrades, with a focus on high-end hotel brands and diverse non-gaming facilities[70] - The company is expanding its presence in Macau with the renovation of its tenth hotel, Galaxy Macau, expected to open in mid-2025, featuring approximately 100 luxury villas and suites[74] Market Position - Galaxy Macau has been recognized as the resort with the most Forbes Five-Star rated hotels for three consecutive years[6] - The company is focusing on enhancing its resorts with new dining and retail options to maintain competitiveness[67]