Ge Long Hui·2025-08-15 03:54Core Viewpoint - Galaxy Entertainment's 2Q25 performance met market expectations, with net revenue of HKD 12.044 billion, a year-on-year increase of 10% and a quarter-on-quarter increase of 8%, recovering to 91% of 2Q19 levels [1] Financial Performance - Adjusted EBITDA for 2Q25 was HKD 3.569 billion, up 12% year-on-year and 8% quarter-on-quarter, aligning closely with Bloomberg's expectation of HKD 3.540 billion [1] - The company announced an interim dividend of HKD 0.70 per share, corresponding to a payout ratio of approximately 60% [1] Growth Drivers - The strong performance was attributed to the opening of the Capella hotel, which increased market share, and entertainment activities that boosted property visitation [1] - Cost control measures helped maintain stable daily operating costs [1] Management Insights - The management expects capital expenditure for 2025 to be HKD 7 billion, with HKD 3 billion spent in the first half of 2025 [1] - The company plans to continue hosting large concerts and entertainment events in Macau, recognizing the sustainability and return potential of integrated resorts [1] Market Positioning - The high-end gaming segment continues to outperform the regular gaming segment, driven by the opening of Capella [1] - The management anticipates that the StarWorld Hotel will benefit from the demand for satellite casinos, which are expected to close by the end of 2025 [1] Investment Outlook - Due to the better-than-expected performance of Capella, the adjusted EBITDA forecasts for 2025 and 2026 have been raised by 5% and 3% to HKD 14.524 billion and HKD 15.330 billion, respectively [2] - The target price has been increased by 6% to HKD 44.80, reflecting an 11% upside potential based on a 10x EV/adjusted EBITDA for 2025 [2]