Core Viewpoint - The company reported strong financial performance for Q2 2025, with significant year-on-year and quarter-on-quarter growth in net revenue and adjusted EBITDA, driven primarily by high-end gaming activities [1][2][4] Financial Performance - Net revenue for the company increased by 10.3% year-on-year and 7.5% quarter-on-quarter to HKD 12.04 billion, recovering to 91.4% of the same period in 2019 [1] - Adjusted EBITDA rose by 12.4% year-on-year and 8.3% quarter-on-quarter to HKD 3.57 billion, recovering to 82.4% of the same period in 2019, with an EBITDA margin of 29.6% [1] - The company announced an interim dividend of HKD 0.7 per share, with a payout ratio increased to 59%, marking it as the first in the industry to raise dividends [1] Segment Performance - "Galaxy Macau" and StarWorld Hotel reported net revenues of HKD 10 billion and HKD 1.17 billion respectively, with year-on-year growth of 16% and a decline of 11.5%, while quarter-on-quarter changes were 9% and a decrease of 5.7% [2] - Adjusted EBITDA for "Galaxy Macau" and StarWorld Hotel was HKD 3.33 billion and HKD 0.30 billion respectively, with year-on-year growth of 19.5% and a decline of 22.3%, and quarter-on-quarter changes of 10.2% and a decrease of 13.4% [2] - Hotel occupancy rates for "Galaxy Macau" and StarWorld Hotel were reported at 98% and 100% respectively [2] Development Projects - The company has commenced trial operations for its new hotel brand, Capella, which features approximately 95 luxury villas and suites, aiming to attract high-quality clientele [3] - Ongoing construction for the fourth phase of "Galaxy Macau" is expected to be completed by 2027, covering an area of approximately 600,000 square meters and introducing several high-end hotel brands [3] - The total capital expenditure budget for the year is set at HKD 7 billion, with HKD 1.5 billion already invested during the period [3] Market Dynamics - Large concerts and performances are contributing to overall revenue growth, while competition within the industry remains intense but manageable [4] - Retail sales remained stable, with rental income increasing by 1%, and future retail growth is expected to be steady [4] - The company is focusing on enhancing non-gaming facilities to cater to mid-market strategies, particularly at StarWorld Hotel [4] Investment Outlook - The company maintains a buy rating with a target price of HKD 49.81, reflecting confidence in its long-term growth prospects due to strong financials, robust management, and ongoing development projects [4]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 49.81, representing a potential upside of 26.61% from the current price of HKD 39.34 [4][5]. Core Insights - The company reported a strong performance in Q2 2025, with net revenue increasing by 10.3% year-on-year and 7.5% quarter-on-quarter, reaching HKD 12.04 billion, which is 91.4% of the revenue from the same period in 2019 [5]. - The adjusted EBITDA grew by 12.4% year-on-year and 8.3% quarter-on-quarter to HKD 3.57 billion, with an EBITDA margin of 29.6% [5]. - The company announced an interim dividend of HKD 0.7 per share, raising the payout ratio to 59%, marking it as the first in the industry to increase dividends [5]. - The company has a robust balance sheet with net cash of HKD 30.3 billion, which supports the increased dividend payout [5]. Financial Summary - Total net income for 2023 was HKD 35,683.6 million, with projections of HKD 43,432.0 million for 2024, HKD 47,197.2 million for 2025, HKD 51,038.1 million for 2026, and HKD 53,549.2 million for 2027, reflecting a growth of 211.0% in 2023 and 21.7% in 2024 [6]. - EBITDA for 2023 was HKD 9,955.0 million, with forecasts of HKD 12,188.0 million for 2024, HKD 13,856.1 million for 2025, HKD 15,179.9 million for 2026, and HKD 16,297.0 million for 2027, showing a year-on-year growth of 22.4% in 2024 [6]. - Net profit for 2023 was HKD 6,828.0 million, with projections of HKD 8,759.2 million for 2024, HKD 10,132.8 million for 2025, HKD 11,160.3 million for 2026, and HKD 12,138.0 million for 2027, indicating a growth of 28.3% in 2024 [6]. Operational Highlights - The company’s VIP gaming table turnover increased by 20.8% year-on-year and 20.2% quarter-on-quarter, while mass gaming revenue grew by 6.4% year-on-year and 7.1% quarter-on-quarter [5]. - The occupancy rates for "Galaxy Macau™" and the StarWorld Hotel were reported at 98% and 100%, respectively [5]. - The company is progressing with the construction of the fourth phase of "Galaxy Macau™," expected to be completed in 2027, which will introduce several high-end hotel brands and a theater with 5,000 seats [5].