Core Insights - The report from CICC highlights that Galaxy Entertainment's net revenue for Q2 reached HKD 12.044 billion, representing a year-on-year growth of 10% [1] - Adjusted EBITDA was HKD 3.569 billion, up 12% year-on-year, recovering to 82% of the Q2 2019 level, aligning closely with market expectations of HKD 3.54 billion [1] - The company's performance exceeded expectations primarily due to the opening of the Capella Hotel, which boosted market share, increased visitor numbers driven by entertainment activities, and stable daily operating costs due to effective cost control [1] - The interim dividend is set at HKD 0.7 per share, corresponding to a payout ratio of approximately 60% [1] - CICC has raised Galaxy Entertainment's adjusted EBITDA forecasts for the next two years by 5% and 3%, to HKD 14.524 billion and HKD 15.33 billion respectively [1] - The target price has been increased by 6% to HKD 44.8, while maintaining an "outperform" rating [1]

Core Viewpoint - The Hong Kong stock market showed a strong upward trend in the morning session, with the Hang Seng Technology Index leading the gains, reflecting a notable recovery in market sentiment [1] Group 1: Market Performance - The Hang Seng Index rose by 470 points, surpassing the 25,000 mark, with the Hang Seng Index, and the National Enterprises Index increasing by 1.88% and 1.86% respectively [1] - The Hang Seng Technology Index surged by 2.35%, indicating strong performance in the technology sector [1] Group 2: Sector Performance - Major technology stocks and large financial stocks (insurance, banks, brokers) collectively boosted the market, with Alibaba rising by 4.37%, and Meituan, Tencent, and Baidu each increasing by over 3% [1] - China’s brokerage stocks saw significant gains, with Guolian Minsheng rising nearly 8% [1] - Biopharmaceutical stocks experienced substantial increases, led by Kangnuo Ya, Geely Pharmaceutical, and Innovent Biologics in the innovative drug concept [1] Group 3: Investment Trends - Institutional investors are optimistic about Apple's additional investments in the U.S., which is expected to enhance the valuation of the Apple supply chain, leading to continued gains in Apple-related stocks [1] - Other sectors such as stablecoin-related stocks, Tesla-related stocks, military industry stocks, non-ferrous metal stocks, semiconductor stocks, aviation stocks, and oil stocks also saw upward movements [1] Group 4: Declining Sectors - Conversely, gaming stocks and paper industry stocks faced declines, with Galaxy Entertainment dropping by as much as 4% during the session [1] - Companies like Chenming Paper and Nine Dragons Paper also experienced downturns, while some sectors such as wind power, water services, and vocational education saw partial declines [1] - The overall market still had nearly 30 stocks with declines exceeding 10% [1]

Core Viewpoint - CICC has raised its adjusted EBITDA forecasts for Galaxy Entertainment for 2025 and 2026 by 5% and 3% to HKD 14.524 billion and HKD 15.330 billion respectively, due to better-than-expected performance from the Capella hotel [1] Group 1: Financial Performance - Galaxy Entertainment reported 2Q25 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 the 2Q19 level [2] - Adjusted EBITDA for 2Q25 was HKD 3.569 billion, up 12% year-on-year and 8% quarter-on-quarter, reaching 82% of the 2Q19 level, aligning closely with market expectations of HKD 3.540 billion [2] Group 2: Management Insights - The company declared an interim dividend of HKD 0.70 per share, corresponding to a payout ratio of approximately 60%, and plans to maintain this payout ratio [3] - The high-end mass gaming segment continues to outperform the standard mass segment, driven by the opening of the Capella hotel, which has increased customer daily theoretical win and spending levels [3] - Management anticipates capital expenditures of HKD 7 billion for 2025, with HKD 3 billion spent in the first half of 2025, while maintaining daily operating costs at the same level as in 1Q25 despite the opening of the Capella hotel [3] - The company is focusing on transitioning the StarWorld Hotel towards mass gaming, emphasizing electronic gaming machines, with 100 out of 250 gaming tables relocated to the Galaxy Macau property [3] - Management expects the StarWorld Hotel to benefit from the retention demand of satellite casinos, which are set to close by the end of 2025 [3] - The company is interested in investing in a resort in Bangkok, Thailand, and will monitor potential changes in the external environment [3]

Core Viewpoint - CICC has raised the adjusted EBITDA forecasts for Galaxy Entertainment for 2025 and 2026 by 5% and 3% to HKD 14.524 billion and HKD 15.330 billion respectively, due to better-than-expected performance from the Capella hotel [1] Group 1: Financial Performance - Galaxy Entertainment reported 2Q25 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 the 2Q19 level [2] - Adjusted EBITDA for 2Q25 was HKD 3.569 billion, up 12% year-on-year and 8% quarter-on-quarter, reaching 82% of the 2Q19 level, aligning closely with market expectations of HKD 3.540 billion [2] Group 2: Management Insights - The company declared an interim dividend of HKD 0.70 per share, corresponding to a payout ratio of approximately 60%, and plans to maintain this payout ratio [3] - The high-end mass gaming segment continues to outperform the standard mass segment, driven by the opening of the Capella hotel, which has led to strong growth in customer daily theoretical win and spending levels [3] - Management anticipates capital expenditures of HKD 7 billion for 2025, with HKD 3 billion spent in the first half of 2025, while maintaining daily operating costs at the same level as in Q1 2025 [3] - The company is focused on hosting large concerts and entertainment events in Macau, recognizing the sustainability and return potential of integrated resorts [3]

Group 1 - The report highlights that the US CPI has increased expectations for interest rate cuts, with the core inflation rate rising to its highest level since the beginning of the year, driven by service prices, while commodity prices have seen moderate increases [8][11] - China Evergrande Group's Hong Kong-listed shares will be delisted, marking the end of an era for the once-prominent real estate developer, which has liabilities of HKD 350 billion and is currently unable to achieve a comprehensive restructuring [8][11] - The report notes that US tariff revenues reached a record high in July, but this did not prevent the budget deficit from widening, indicating ongoing fiscal challenges for the federal government [11] Group 2 - China Unicom reported a 5% increase in net profit to RMB 14.48 billion for the first half of 2025, with a total of approximately 1.208 billion connected users, including 213.5 million 5G package users [12] - Tencent Music's net profit for the second quarter rose by 43.2% year-on-year to RMB 2.409 billion, with total revenue increasing by 17.9% to RMB 8.44 billion [12] - Galaxy Entertainment's interim net profit increased by 19.4% to RMB 5.24 billion, with a revenue of RMB 23.246 billion, reflecting an 8.3% year-on-year growth [12] Group 3 - The report indicates that the global oil market is expected to tighten more than previously anticipated, with OPEC raising its forecast for global oil demand growth due to accelerating demand and slowing supply growth from competitors [11] - The report mentions that the personal consumption loan subsidy policy implemented by China aims to stimulate consumer spending by reducing the cost of consumer credit [11] - The report discusses the performance of various companies, including a significant oversubscription for the public offering of Silver Pharma-B, which was oversubscribed by approximately 5,364 times, attracting around 370 billion in subscriptions [10]

Major Events - Kangji Medical (09997) received a privatization offer at a premium of approximately 9.9% [1] - China Resources Pharmaceutical (03320) plans to participate in the establishment of a fund [1] - Ganfeng Lithium (01772) intends to jointly integrate a joint venture with LAR to develop the Pozuelos-Pastos Grandes salt lake basin in Argentina [1] - China Antibody-B (03681) signed a comprehensive strategic cooperation agreement with the Hong Kong Advanced Institute of Research at Sun Yat-sen University [1] - Mingyuan Cloud (00909) plans to acquire 100% equity of ASIOT Corporation for 700 million yen [1] - Weilu Group (01196) experienced unusual stock price and trading volume changes and is in preliminary discussions with an independent third party regarding a potential acquisition of mobile game rights [1] Operating Performance - China Unicom (00762) reported revenue exceeding 200 billion yuan in the first half of the year, with a profit attributable to equity holders of 14.484 billion yuan, a year-on-year increase of 5.01% [1] - China Unicom (00762) had approximately 1.208 billion cumulative "Ubiquitous Intelligent Connection" users in the second quarter [1] - Tencent Music (01698) achieved double growth in revenue and profit in the first half of the year, with a profit attributable to equity holders of 6.7 billion yuan, a year-on-year increase of 115.85% [1] - Galaxy Entertainment (00027) reported a mid-term profit attributable to shareholders of 5.24 billion HKD, a year-on-year increase of 19.44% [1] - WH Group (00288) reported a mid-term profit attributable to shareholders of 788 million USD, a year-on-year increase of 0.51%, with an interim dividend of 0.2 HKD per share [1] - Minmetals Resources (01208) reported a mid-term profit attributable to equity holders of 340 million USD, a year-on-year increase of 1511% [1] - China Literature Group (00772) reported a mid-term profit attributable to shareholders of 850 million yuan, a year-on-year increase of 68.5% [1] - Hong Kong Electric (02638) reported a mid-term profit attributable to unit holders of 1.001 billion HKD, a year-on-year increase of 5.7% [1] - 361 Degrees (01361) reported a mid-term profit attributable to equity holders of 858 million yuan, a year-on-year increase of 8.6% [1] - Eagle Precision (01286) reported a mid-term profit attributable to equity holders of 346 million HKD, a year-on-year increase of 13.7% [1] - China Everbright Water (01857) reported a mid-term profit attributable to equity holders of 564 million HKD, a year-on-year decrease of 2.99% [1] - FIT HON TENG (06088) reported a mid-term profit attributable to shareholders of 31.511 million USD, a year-on-year decrease of 3.11% [1] - China Lilang (01234) reported a mid-term profit attributable to equity holders of 243 million yuan, a year-on-year decrease of 13.4% [1] - Fudan Zhangjiang (01349) reported a mid-term profit attributable to shareholders of 5.715 million yuan, a year-on-year decrease of 91.89% [1] - Wharf Holdings (00004) reported a mid-term profit attributable to shareholders of 535 million HKD, returning to profitability [1] - China Resources Land (01109) reported a cumulative contract sales amount of approximately 123.6 billion yuan for the first seven months, a year-on-year decrease of 11.8% [1]

Q2 & Interim Results 2025 12 August, 2025 Mr. Francis Lui Yiu Tung, Chairman of GEG said: "Today I am pleased to report solid performance for the Macau market and GEG in Q2 and the first half of 2025. Despite global tariff disruptions, continued economic slowdown and regional competition, Macau remained resilient in Q2 2025 with Gross Gaming Revenue ('GGR') growing 8% year- on-year and 6% quarter-on-quarter to $59.3 billion. GEG delivered solid results and growth in market share under competitive market con ...

Group 1 - UBS report indicates that Galaxy Entertainment (00027) declared an interim dividend of HKD 0.7 per share, exceeding market expectations with a payout ratio of approximately 58%, compared to the expected 50%, which is viewed as a positive surprise [1] - The report states that Galaxy Entertainment's adjusted EBITDA for Q2 increased by 12% year-on-year to HKD 3.6 billion, and if adjusted for VIP room win rate factors, EBITDA grew approximately 7% quarter-on-quarter to HKD 3.2 billion [1] - Despite an increase in market share, the EBITDA margin (excluding construction business) declined by 10 basis points quarter-on-quarter to 29.6% due to rising reinvestment rates [1] Group 2 - Mass gaming revenue grew approximately 7% quarter-on-quarter, outperforming the industry average growth of 4% [1] - VIP room betting volume increased by approximately 20% quarter-on-quarter, primarily driven by the soft opening of the Capella Hotel in early May [1] - Operating expenses for the period rose by 2% quarter-on-quarter, with reinvestment rates increasing by 120 basis points, reflecting increased promotional activities related to concerts and hotel openings in Q2 [1]

Core Viewpoint - UBS reports that Galaxy Entertainment (00027) declared an interim dividend of HKD 0.7 per share, exceeding market expectations with a payout ratio of approximately 58%, compared to the expected 50%, which UBS views as a positive surprise, maintaining a "Buy" rating with a target price of HKD 43.9 [1] Financial Performance - Galaxy Entertainment's adjusted EBITDA for Q2 increased by 12% year-on-year to HKD 3.6 billion; when adjusting for VIP room win rate factors, EBITDA grew approximately 7% quarter-on-quarter to HKD 3.2 billion [1] - Despite an increase in market share, the EBITDA margin (excluding construction business) declined by 10 basis points quarter-on-quarter to 29.6% due to rising reinvestment rates [1] Revenue Breakdown - Mass gaming revenue grew approximately 7% quarter-on-quarter, outperforming the industry average growth of 4% [1] - VIP room betting volume increased by approximately 20% quarter-on-quarter, primarily driven by the soft opening of the Capella Hotel in early May [1] Operating Expenses - The company's daily operating expenses rose by 2% quarter-on-quarter, with reinvestment rates increasing by 120 basis points, reflecting higher promotional activities related to concerts and hotel openings in Q2 [1]

Group 1 - Morgan Stanley reported that Galaxy Entertainment (00027) declared an interim dividend of HKD 0.7 per share, a 40% increase year-on-year, exceeding the bank's expectation of HKD 0.6 per share [1] - The dividend yield stands at 3.5%, which is less attractive compared to a payout ratio of 59%, up from the previous 50% [1] - Adjusted EBITDA for the second quarter was HKD 3.162 billion, a 1% decrease year-on-year but a 7% increase quarter-on-quarter, representing 79% of the EBITDA from the second quarter of 2019, falling short of both the bank's and market expectations [1] Group 2 - The reported EBITDA for Galaxy Entertainment was HKD 3.569 billion, reflecting an 8% quarter-on-quarter increase and a 12% year-on-year increase, which is 82% of the EBITDA from the second quarter of 2019, benefiting from a 4.4% increase in VIP room win rate [1] - Excluding the City Club, the mass gaming revenue increased by 7% quarter-on-quarter, reaching 130% of the second quarter of 2019, with market share increasing by 20 basis points to 19% [1] - Due to a business mix favoring VIP rooms and rising operating costs, the EBITDA margin was weak, with the reinvestment rate for mass gaming increasing by 150 basis points to 19.8% [1]