Ge Long Hui·2025-08-15 03:54Core Viewpoint - Galaxy Entertainment reported a mixed performance in 2Q25, with net revenue growth but lower-than-expected EBITDA, leading to revised earnings forecasts and a lowered target price while maintaining a Buy rating [1][4]. Financial Performance - 2Q25 net revenue reached HK$12.0 billion, reflecting an 8% quarter-over-quarter increase and a 10% year-over-year increase [1]. - Normalized adjusted EBITDA was HK$3.2 billion, showing a 7% increase QoQ but a 1% decrease YoY, attributed to a lower mass market hold rate [1]. - Total gross gaming revenue, mass market revenue, slot machine revenue, and VIP rolling chip volume recovered to 82%, 130%, 138%, and 31% of 2Q19 levels, respectively [2]. - EBITDA recovery was at 79% of the 2019 level [2]. Dividend and Cash Position - As of June 30, 2025, the company's net cash stood at HK$30.3 billion [4]. - The interim dividend is set at HK$0.70 per share, with a payout ratio increased to 58% from 50% in 2024 [4]. New Developments - The Capella Hotel, a 95-all-suite project, has been in trial operation since May, with full opening expected soon [3]. - Construction of Phase 4 of Galaxy Macau is progressing, with completion scheduled for 2027, featuring high-end hotel brands, a theater with approximately 5,000 seats, green gardens, a water resort deck, and a casino [3]. Investment Outlook - The target price has been revised down from HK$55 to HK$50, indicating a 24% upside potential, while the Buy rating is maintained due to the resilience of the gaming business and long-term growth potential [1][4].