Core Viewpoint - The report from Daiwa Capital Markets maintains a "Buy" rating for Galaxy Entertainment (00027) and raises the target price by 4% to HKD 49, reflecting strong performance in the gaming sector [1] Group 1: Financial Performance - In Q4 of the previous year, Galaxy Entertainment's gaming revenue increased by 14% quarter-on-quarter, outperforming the industry growth rate of approximately 6% [1] - The gaming revenue has recovered to about 97% of the levels seen in 2019, indicating a strong rebound in performance [1] - The market share for Galaxy Entertainment's gaming revenue increased by 1.6 percentage points to 21.8% quarter-on-quarter [1] Group 2: Profitability and EBITDA - Despite strong growth in gaming revenue and market share, the adjusted normalized EBITDA margin decreased by 1.6 percentage points quarter-on-quarter, which is a disappointing aspect of the performance [1] - Daiwa Capital Markets has adjusted its EBITDA forecasts for Galaxy Entertainment for 2026 and 2027 upwards by 1% each [1] Group 3: Future Outlook - Data from the recent Lunar New Year holiday shows encouraging results, outperforming both last year's Lunar New Year and the October Golden Week [1] - Management anticipates maintaining a positive momentum through March and the first quarter overall, and they are committed to continuously reviewing the dividend policy [1]

Group 1 - The core viewpoint of the report is that the company maintains a "Buy" rating for Galaxy Entertainment (00027) and raises the target price by 4% to HKD 49 [1] - In Q4 of last year, the company's gaming revenue increased by 14% quarter-on-quarter, outperforming the industry growth rate of approximately 6%, and has recovered to about 97% of the 2019 level [1] - The estimated market share of the company in Q4 increased by 1.6 percentage points quarter-on-quarter to 21.8%, indicating strong performance in gaming revenue and market share growth [1] Group 2 - The adjusted normalized EBITDA margin decreased by 1.6 percentage points quarter-on-quarter, which was disappointing despite the strong revenue growth [1] - Data from this year's Lunar New Year holiday is encouraging, performing better than last year's Lunar New Year and the October Golden Week, with management expecting a good momentum to continue into March and the first quarter overall [1] - The company has committed to continuously reviewing its dividend policy and has raised its EBITDA forecasts for 2026 and 2027 by 1% each [1]

Core Viewpoint - The company achieved a net revenue of HKD 13.833 billion in Q4 2025, representing a year-on-year increase of 22.5%. Adjusted EBITDA reached HKD 4.296 billion, up 32.7% year-on-year. For the full year 2025, net revenue totaled HKD 49.242 billion, a 13.4% increase, with adjusted EBITDA of HKD 14.502 billion, up 19.0% year-on-year [1] Financial Performance - Q4 2025 net revenue was HKD 13.833 billion, a 22.5% increase year-on-year. Adjusted EBITDA for the same period was HKD 4.296 billion, reflecting a 32.7% year-on-year growth [1] - For the full year 2025, net revenue reached HKD 49.242 billion, a 13.4% increase year-on-year, with adjusted EBITDA of HKD 14.502 billion, up 19.0% year-on-year [1] Business Segments - The company's VIP and mass market gaming segments showed record recovery, with Q4 2025 VIP gaming revenue at HKD 3.109 billion and mass gaming revenue at HKD 10.011 billion. Total gaming revenue reached HKD 13.950 billion, recovering to 48.1%, 136.6%, and 96.6% of 2019 levels respectively, marking new highs for recovery in 2023 [1] - The company expects its market share to rise to approximately 22% in Q4 2025, indicating stable growth in market share [1] Non-Gaming Initiatives - The company is actively optimizing non-gaming projects and enhancing shareholder returns. In 2025, the number of visitors to Macau is projected to increase by 15% to 40.1 million, setting a new historical record [2] - The company is focusing on high-end mass and ultra-high-end gaming segments, with the opening of the Capella in May 2025 and a significant contribution expected from this segment [3] - The company hosted around 350 events in 2025, including concerts and large-scale activities, and is progressing with the renovation of its facilities, including hotel rooms and dining areas [3] Shareholder Returns - The board of directors proposed a final dividend of HKD 0.80 per share for the year ending December 31, 2025, up from HKD 0.50 per share in 2024. The total dividend for 2025 is expected to be HKD 1.50 per share, compared to HKD 1.00 per share in 2024, with a payout ratio exceeding 60% [4] - The company anticipates net profits of HKD 11.604 billion and HKD 12.496 billion for 2026 and 2027, respectively, with current price-to-earnings ratios of 15.8X and 14.6X [4]

Investment Rating - The report assigns a "Buy" rating to Galaxy Entertainment with a target price of HKD 46.9 [1] Core Insights - Galaxy Entertainment's adjusted EBITDA for Q4 last year was approximately HKD 4.3 billion, representing a year-on-year increase of about 33% and a quarter-on-quarter increase of about 29% [1] - After normalizing the net win rate, the EBITDA was around HKD 3.6 billion, showing a year-on-year growth of 9% and a quarter-on-quarter growth of 7%, which met expectations [1] - The total gaming revenue from the mass market increased by approximately 6% quarter-on-quarter, outperforming the industry trend of being roughly flat, partly driven by an increase in the win rate at mass gaming tables [1] - Galaxy Entertainment announced a final dividend of HKD 0.8 per share, exceeding the market expectation of HKD 0.65, bringing the total annual dividend to HKD 1.5 per share, which corresponds to a payout ratio of approximately 61% for the year, compared to an expected 50% for 2024 [1]

Investment Rating - The report maintains a "Outperform" rating for Galaxy Entertainment [1] Core Insights - For the fourth quarter of fiscal year 2025, adjusted EBITDA for Galaxy Entertainment surged 33% year-on-year to HKD 4.3 billion, exceeding both the firm's and market forecasts by 3% [1] - The final dividend increased by 60% to HKD 0.8, with the full-year payout ratio expanding by 1,100 basis points to 61% [1] - The firm believes that Galaxy Entertainment remains competitive in the Macau market and can effectively defend its market share, with further potential for dividend increases [1] Financial Performance - The report highlights that the high win rate in the VIP gaming segment positively impacted EBITDA by HKD 731 million, while the adjusted profit margin remained stable at 27.2% despite increasing competitive pressures [1] - It is anticipated that capital expenditures for Galaxy Entertainment will peak this year, allowing for sustainable expansion of the dividend payout ratio [1]

Group 1 - The core viewpoint of the article highlights that Galaxy Entertainment reported strong quarterly performance, with EBITDA increasing by 29% quarter-on-quarter to HKD 4.3 billion, exceeding market consensus expectations [1] - The company declared a final dividend of HKD 0.8 per share, resulting in a payout ratio of 64% for the second half of 2025, an increase from 58% in the first half of 2025 and 50% for the fiscal year 2024 [1] - Management expressed intentions to maintain a dividend payout of at least 65% of profits in the future, indicating strong financial capacity to increase dividends [1] Group 2 - Goldman Sachs noted potential impacts on gaming and tourism demand due to the upcoming National People's Congress from March 4 to 11 [1] - The firm slightly adjusted Galaxy Entertainment's EBITDA forecast for the fiscal year 2026 to 2027, with changes of less than 1% [1] - The 12-month target price for the stock was revised down from HKD 54 to HKD 53.4, while maintaining a "Buy" rating, as the current valuation remains attractive at an enterprise value multiple of 10 times the fiscal year 2026 forecast [1]

Core Viewpoint - The company reported a strong performance in Q4 2025, with net revenue reaching HKD 138.3 billion, a year-on-year increase of 22.5%, and adjusted EBITDA of HKD 43.0 billion, up 32.7%, meeting market expectations [1] Group 1: Financial Performance - The company's net revenue for Q4 2025 was HKD 138.3 billion, reflecting a year-on-year growth of 22.5% and a quarter-on-quarter increase of 13.7% [1] - Adjusted EBITDA reached HKD 43.0 billion, with a profit margin of 31.1%, which is an increase of 2.4 percentage points year-on-year [3] - The contribution from gaming and non-gaming segments was HKD 113.6 billion and HKD 17.4 billion, respectively, with year-on-year changes of +28.4% and +3.8% [1] Group 2: Gaming Revenue Breakdown - The company's gross gaming revenue was HKD 139.5 billion, a year-on-year increase of 26.5%, surpassing the industry growth rate of 15% [2] - VIP gaming revenue saw a significant increase of 102.0% year-on-year, reaching HKD 31.1 billion, driven by higher win rates and betting amounts [2] - The actual net win rate for Q4 2025 was 5.14%, compared to 3.0% in Q4 2024, indicating a strong performance in the VIP segment [2] Group 3: Market Share and Future Projections - The company's market share in Q4 2025 was 21.8%, an increase from 20.2% in Q3 2025 and 19.8% in Q4 2024 [3] - Future projections estimate net revenue for 2026 and 2027 at HKD 52,483 million and HKD 56,712 million, respectively, with expected growth rates of 6.6% and 8.1% [4] - The company is projected to maintain an adjusted EBITDA margin of approximately 28.7% in 2026 and 29.1% in 2027 [4]

Core Viewpoint - Galaxy Entertainment's 4Q25 performance met expectations, with revenue of HKD 13.833 billion, a year-on-year increase of 22% and a quarter-on-quarter increase of 14%, recovering to 107% of 4Q19 levels [1] Financial Performance - Adjusted EBITDA for 4Q25 was HKD 4.296 billion, up 33% year-on-year and 29% quarter-on-quarter, recovering to 106% of 4Q19 levels, exceeding Visible Alpha's consensus estimate of HKD 3.984 billion but aligning closely with the company's forecast of HKD 4.221 billion [1] - The average daily fixed operating cost for 4Q25 was approximately HKD 3.7 million, benefiting from IT upgrades that improved cost control [1] Development Trends - Management emphasized that no trademark licensing fees will be paid as all trademarks and brand names belong to the company, ensuring aligned interests [1] - There has been an increase in customers from regions outside of China, attributed to the establishment of sales offices in Tokyo, Seoul, Bangkok, and Singapore [1] - Management hopes to obtain additional gaming tables for Phase Four, designed as a comprehensive resort with rich non-gaming projects, which is expected to complement Phase Three and boost the Galaxy International Convention Center and Galaxy Arena [1] Dividend and Investment Outlook - The company announced a final dividend of HKD 0.80 per share, with a payout ratio of 65% for 2H25, compared to 30% in 2019 [2] - The company aims to maintain its current reinvestment rate and is expected to benefit from strong post-holiday demand due to the extended 9-day Chinese New Year holiday in 2026 [2] Earnings Forecast and Valuation - The company maintains its adjusted EBITDA forecasts for 2026 and 2027, with the current stock price corresponding to 9 times the 2026 EV/adjusted EBITDA [2] - The target price is set at HKD 44.10, reflecting 11 times the 2026 EV/adjusted EBITDA, indicating a 6% upside potential from the current stock price [2]

Investment Rating - The report maintains an investment rating of "Buy" for the company [5]. Core Insights - The company reported a strong performance in Q4 2025, with a net win rate that exceeded expectations, leading to a total GGR growth of 14% quarter-on-quarter, outperforming the industry average of 6% [5][6]. - The adjusted EBITDA for Q4 2025 was HKD 4.4 billion, surpassing Bloomberg's consensus estimate of HKD 3.6 billion, indicating robust operational efficiency [5]. - The company is expected to benefit from the opening of the Capella hotel in February 2026, which is anticipated to enhance its high-end market position and drive steady growth in gaming revenue [5][8]. Financial Projections - Revenue projections for the company are as follows: - 2025: HKD 49,242 million - 2026E: HKD 53,125 million (up 13.68%) - 2027E: HKD 57,896 million (up 7.89%) - 2028E: HKD 62,238 million (up 10.11%) [4]. - Net profit attributable to the parent company is projected to be: - 2025: HKD 10,674 million - 2026E: HKD 10,625 million (down 0.46%) - 2027E: HKD 11,753 million (up 10.62%) - 2028E: HKD 12,821 million (up 9.09%) [4]. - The report anticipates an adjusted EBITDA of HKD 159 billion for 2026 and HKD 174 billion for 2027, with a target price set at HKD 48.00 [9]. Market Performance - The company's GGR for Q4 2025 reached HKD 14 billion, reflecting a year-on-year increase of 27% and a quarter-on-quarter increase of 14%, recovering to 100% of the levels seen in Q4 2019 [6]. - The company’s EBITDA margin for Q4 2025 was reported at 33.4%, indicating a recovery in operational efficiency [5][6]. - The company hosted approximately 350 entertainment, sports, and exhibition events in 2025, contributing to increased foot traffic and customer engagement [5][7]. Non-Gaming Initiatives - The company is actively enhancing its non-gaming entertainment ecosystem, collaborating with leading global entertainment firms to host major concerts and events, which are expected to drive customer traffic and high-end spending [7]. - The Capella hotel opening is expected to further solidify the company's market share in the ultra-high-end segment [7].

Investment Rating - The report maintains an investment rating of "Buy" for the company [5]. Core Insights - The company reported a strong performance in Q4 2025, with a net win rate that exceeded expectations, leading to a total GGR growth of 14% quarter-on-quarter, outperforming the industry average of 6% [5][6]. - The adjusted EBITDA for Q4 2025 was HKD 4.4 billion, surpassing Bloomberg's consensus estimate of HKD 3.6 billion, indicating robust operational efficiency [5]. - The company is expected to benefit from the opening of the Capella hotel in February 2026, which is anticipated to enhance its high-end market position and drive steady growth in gaming revenue [5][8]. Financial Projections - Revenue projections for the company are as follows: - 2025: HKD 49,242 million - 2026E: HKD 53,125 million (up 8.69%) - 2027E: HKD 57,896 million (up 13.68%) - 2028E: HKD 62,238 million (up 7.89%) [4]. - Net profit attributable to the parent company is projected to be: - 2025: HKD 10,674 million - 2026E: HKD 10,625 million (down 0.46%) - 2027E: HKD 11,753 million (up 10.62%) - 2028E: HKD 12,821 million (up 9.09%) [4]. - The report anticipates an adjusted EBITDA of HKD 159 billion for 2026 and HKD 174 billion for 2027, with a target price set at HKD 48.00 [9]. Market Performance - The company's GGR for Q4 2025 reached HKD 14 billion, reflecting a year-on-year increase of 27% and a quarter-on-quarter increase of 14%, recovering to 100% of the levels seen in Q4 2019 [6]. - The company’s EBITDA margin for Q4 2025 was reported at 33.4%, indicating a recovery in operational efficiency [5][6]. - The company hosted approximately 350 entertainment, sports, and exhibition events in 2025, contributing to increased foot traffic and revenue [5][7]. Non-Gaming Initiatives - The company is actively enhancing its non-gaming offerings, aiming to position Macau as a hub for entertainment and sports, with plans for major concerts and events in 2026 [7]. - The Capella hotel opening is expected to further increase the company's market share in the high-end segment [7].