Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company has shown steady performance in Q1, with a 6.2% year-on-year increase in net revenue to HKD 11.2 billion, driven by a significant increase in visitor numbers and entertainment events in Macau [1][2] - The opening of the Capella hotel is expected to attract high-end customers and set a new benchmark for luxury hotels in Macau, enhancing the company's appeal to ultra-high-net-worth individuals [3] - The company plans to increase its dividend payout ratio to 50%, reflecting confidence in its long-term prospects [2] Financial Performance Summary - Q1 visitor numbers in Macau increased by 11% year-on-year and 9% quarter-on-quarter, with a 64% increase in traffic attributed to major entertainment events [1] - Q1 adjusted EBITDA grew by 16.3% to HKD 3.3 billion, with an EBITDA margin of 29.4%, up 2.6 percentage points year-on-year [1] - Revenue projections for 2025-2027 are estimated at HKD 46.1 billion, HKD 50.0 billion, and HKD 54.7 billion, representing year-on-year growth rates of 6.1%, 8.5%, and 9.3% respectively [3][4] Market Position and Events - The company has increased its market share during the May Day holiday, with a series of events expected to drive demand in Q2, including concerts and international competitions [2] - The company is set to host several high-profile events, including concerts by BTS and G-Dragon, which are anticipated to further boost performance [2] Valuation Metrics - The current market capitalization is approximately HKD 140.2 billion, with an EV/EBITDA multiple of 9.7x for 2025 estimates [4][5] - The projected return on equity (ROE) is expected to improve from 10.1% in 2023 to 14.6% by 2027 [11]

Investment Rating - The investment rating for the company is "Buy" [5][6] Core Views - The company's performance in Q1 2025 met expectations, with total gaming revenue reaching HKD 10.94 billion, a year-on-year increase of 13.6% [5] - The company has seen a significant increase in market share, with VIP and mass market gaming revenue growing by 52.3% and 7.6% respectively [5] - The opening of the Capella hotel in early May is expected to attract high-end consumers, with over 50% of guests being direct VIP customers [5] - The company forecasts revenue growth for 2025-2027, with total revenue projected at HKD 48.27 billion in 2025, HKD 51.38 billion in 2026, and HKD 53.17 billion in 2027 [5][6] Financial Projections - Total revenue (in million HKD) for 2024A, 2025E, 2026E, and 2027E is projected to be 43,432.0, 48,273.2, 51,381.2, and 53,165.0 respectively, with year-on-year growth rates of 21.7%, 11.1%, 6.4%, and 3.5% [6] - Adjusted property EBITDA (in million HKD) is expected to be 12,187.6 for 2024A, 14,248.0 for 2025E, 15,667.8 for 2026E, and 16,136.9 for 2027E, with growth rates of 28.3%, 31.4%, 11.1%, and 2.0% respectively [6] - The diluted earnings per share (in HKD) are projected to be 2.00 for 2024A, 2.65 for 2025E, 3.09 for 2026E, and 3.17 for 2027E [6] Market Data - The closing price of the stock is HKD 32.00, with a market capitalization of HKD 139,997 million [3][4] - The stock has a price-to-book ratio of 1.84 and a current EV/Adjusted Property EBITDA of 10.24 for 2024A, decreasing to 7.74 by 2027E [4][6]

Group 1 - The gaming stocks continue to rise, with notable increases in share prices for companies such as Melco International Development (+6.63%), Galaxy Entertainment (+4.07%), Wynn Macau (+1.64%), and Sands China (+1.28%) [1] - Melco International Development reported a total operating revenue of $1.23 billion for Q1 2025, representing an approximate 11% year-on-year increase, attributed to improved performance in both gaming and non-gaming operations [1] - Galaxy Entertainment announced a net revenue of HKD 11.2 billion for Q1 2025, up 6% year-on-year but down 1% quarter-on-quarter, with adjusted EBITDA rising 16% year-on-year to HKD 3.3 billion [1] Group 2 - Morgan Stanley reported that Macau's gaming revenue for the first five days of May reached MOP 1.02 billion, achieving a strong 12% year-on-year growth despite a high base from the previous year, recovering to over 90% of pre-pandemic levels [2] - The reported figures significantly exceeded the expected daily average of MOP 850 million, marking the largest positive surprise in years, with growth particularly encouraging [2] - Over half of Macau's gaming operators have released their Q1 results, but the current financial reports are expected to have limited impact on stock prices, with focus shifting to management's insights on the sustainability of the Golden Week's performance and detailed operational data from various operators [2]

Group 1 - The core viewpoint of the report is that due to the continuous increase in market share, the adjusted EBITDA forecasts for Melco International Development for 2025 and 2026 have been raised by 2% to HKD 14.01 billion and HKD 13.45 billion respectively [1] - The current stock price corresponds to a 5x EV/adjusted EBITDA for 2025, indicating a potential upside of 48% compared to the current stock price [1] Group 2 - In Q1 2025, Melco Resorts reported net revenue of USD 1.232 billion, an increase of 11% year-on-year and 3% quarter-on-quarter, recovering to 89% of Q1 2019 levels [2] - The adjusted property EBITDA for Q1 2025 was USD 341 million, up 14% year-on-year and 15% quarter-on-quarter, exceeding Bloomberg's consensus estimate of USD 315 million [2] - The performance is attributed to the increase in market share at City of Dreams and Studio City in Macau [2] Group 3 - Management indicated that the market share in Macau reached 15.7% in April 2025, with high-end mass gaming continuing to drive performance growth [3] - The show "The House of Dancing Water" premiered at City of Dreams on May 7, 2025 [3] - Management expects the reinvestment rate in the Macau gaming industry to stabilize compared to a year ago [3] Group 4 - During the May Day Golden Week in 2025, the betting volume in Macau properties was strong, with a 20% year-on-year increase in mass gaming at City of Dreams, supported by a 30% increase in property foot traffic [4] - The win amount from rated customers in Macau properties increased by 12% year-on-year [4]

Market Overview - The Hang Seng Index faces initial resistance at 23,000 points due to increased tariffs on Chinese imports announced by the US government, while expectations rise for the Chinese government to implement measures to stimulate economic growth and stabilize capital markets [2][3] - The People's Bank of China is reportedly relaxing restrictions on gold imports to ease the appreciation of the yuan, and there are plans to promote a new sales system for newly built homes to restore buyer confidence [3][8] Company News - Semiconductor company SMIC reported a 1.6 times year-on-year increase in first-quarter profit, with revenue expected to decline by 4% to 6% in the second quarter [10] - Huahong Semiconductor experienced an 88% drop in first-quarter profit, despite a 17.6% increase in sales revenue [10] - Galaxy Entertainment's first-quarter net revenue rose by 6%, driven by a 13.61% increase in total gaming revenue [10] - Unified Enterprises China reported a 32% increase in after-tax profit for the first quarter [10] - BYD aims to achieve 50% of its vehicle sales from overseas markets by 2030, focusing on expansion in Europe and Latin America [10] - Dongfeng Group's vehicle sales fell by 21% in the first four months of the year, while new energy vehicle sales increased by 27.73% [10][11] Economic Indicators - In April, retail sales of new energy vehicles in China increased by 37%, with a penetration rate of 52.3% [8] - The People's Bank of China has lowered the personal housing provident fund loan rates in major cities, aiming to support the housing market [8] - The first batch of securities companies' sci-tech bonds is set to be issued, with a total scale exceeding 16 billion yuan, targeting funding for strategic emerging industries [8] Stock Market Performance - The Hang Seng Index closed at 22,776, up 0.37% year-to-date, while the Hang Seng Tech Index rose by 17.03% [5] - The US stock market saw gains of 0.6% to 1.1% across major indices, influenced by trade agreements between the US and UK [6]

Investment Rating - The report maintains a rating of "Outperform the Market" for the industry [3]. Core Insights - The industry fundamentals are expected to remain under pressure in 2024, with most sectors and companies still significantly affected by macroeconomic factors. However, a number of companies are emerging that are successfully navigating the challenges of consumer downgrade by upgrading from categories to quality and then to brand [1][2]. - The report highlights that companies with strong brand attributes are likely to continue outperforming as the market transitions from price-performance to quality-price comparisons [2]. Summary by Sections 1. Duty-Free Sector - The duty-free sales in Hainan are gradually stabilizing, with the implementation of the Hainan closure policy expected to benefit the duty-free sector. The market is seeing improvements in channel and supply chain capabilities, leading to a stable outlook for profitability [2][49]. - Key companies to watch include China Duty Free Group and Wangfujing [2]. 2. Tourism and Gaming - The tourism sector shows strong resilience in demand, becoming a crucial driver for domestic consumption. The recovery in inbound and outbound travel is significant, with a focus on new consumption scenarios and the silver-haired tourism market [2][3]. - Recommended companies include Jiuhua Tourism, Lingnan Holdings, and Sands China [2]. 3. Hotel Industry - The hotel sector is experiencing weak business travel demand, leading to pressure on RevPAR. However, leisure demand remains resilient, and leading companies are enhancing profitability through brand matrix validation and supply chain optimization [3][72]. - Companies to focus on include Huazhu Group, Atour, and Jinjiang Hotels [3]. 4. Restaurant Sector - Leading restaurant companies are demonstrating strong supply chain negotiation and profitability advantages. The overall supply in the restaurant industry is optimizing, with a competitive trend in price-performance [3][7]. - Notable companies include Mixue Ice City, KFC, and Haidilao [3][7]. 5. Cosmetics and Medical Aesthetics - The cosmetics sector is seeing a shift in focus towards profitability, with companies restructuring their product and channel strategies. High-growth companies are expected to achieve both revenue and profit increases [7][23]. - Key players include Juzhibio, Shumei, and Marubi [7][23]. 6. General Retail - The retail sector is undergoing digital upgrades and operational adjustments, with a focus on essential demand and cash flow stability. Companies like Yonghui Supermarket and Multi-Point Intelligence are recommended [8][30]. - The report also highlights the ongoing challenges in the jewelry sector due to rising gold prices [8][30]. 7. Overall Market Performance - The consumer services sector is expected to face challenges, with a projected performance of -8.70% in 2024. However, the beauty and personal care sector is anticipated to recover with a growth of +8.15% in 2025 [11][19].

Core Viewpoint - Galaxy Entertainment Group reported a solid performance for Q1 2025, driven by diverse entertainment offerings and property enhancements, despite geopolitical instability and economic slowdown [2][3][37]. Financial Performance - For Q1 2025, the group recorded a net revenue of HKD 11.2 billion, a year-on-year increase of 6% but a quarter-on-quarter decrease of 1% [15][19]. - Adjusted EBITDA for the same period was HKD 3.3 billion, up 16% year-on-year and 2% quarter-on-quarter [11][15]. - The overall gaming revenue in Macau for Q1 2025 was HKD 56 billion, slightly up year-on-year and quarter-on-quarter, recovering to 76% of 2019 levels [2][14]. Business Segments - The group's flagship property, "Galaxy Macau™," contributed significantly with a net revenue of HKD 9.1 billion, a 10% increase year-on-year [21][23]. - The adjusted EBITDA for "Galaxy Macau™" was HKD 3 billion, reflecting a 15% year-on-year increase [21][23]. - The non-gaming segment continues to play a crucial role, with various entertainment events attracting visitors, leading to a 64% year-on-year increase in visitor numbers to "Galaxy Macau™" [4][38]. Development and Expansion - The new luxury hotel, Galaxy Hotel Capella, commenced trial operations in May 2025, expected to enhance the group's market share and luxury offerings [7][39]. - Ongoing construction of the fourth phase of development focuses on non-gaming facilities, including entertainment and family-friendly amenities, set to be completed by 2027 [33][39]. - The group is exploring overseas opportunities, including potential developments in Thailand [39][40]. Market Overview - Visitor numbers to Macau reached 9.9 million in Q1 2025, an 11% increase year-on-year, with mainland Chinese visitors growing by 15% [14][37]. - The Macau government continues to promote economic diversification and support non-gaming investments, aligning with the group's strategy [3][37].

Core Viewpoint - Galaxy Entertainment reported first-quarter revenue of HKD 11.2 billion, slightly below the forecast of HKD 11.22 billion [1] Company Summary - The company's first-quarter revenue was HKD 11.2 billion, which indicates a minor shortfall compared to market expectations [1]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 6.80 [5][6]. Core Insights - The company's GGR and EBITDA margin have declined quarter-on-quarter, but the overall revenue has increased. The decline in GGR is attributed mainly to a decrease in win rates, particularly in the VIP segment. However, the company has reported an increase in turnover and stable market share, which contributed to a stock price increase of approximately 2% on May 7 [1][4]. - The company's Q1 2025 net revenue was USD 870 million, down 13% year-on-year and 7% quarter-on-quarter. Adjusted EBITDA was USD 250 million, down 26% year-on-year and 14% quarter-on-quarter, recovering to 65% of the level in 2019 [1][2]. - The strong visitor flow during the May Day holiday is expected to support the recovery of the gaming business. Daily average visitors reached 170,000, significantly exceeding the tourism bureau's forecast [3][4]. Summary by Sections Financial Performance - Q1 2025 gross gaming revenue (GGR) was USD 890 million, recovering to 61% of Q1 2019 levels, compared to the industry average of 76%. VIP gross revenue was USD 120 million, recovering to 15% of Q1 2019 levels, while mass market gross revenue was USD 710 million, recovering to 122% of Q1 2019 levels [2][4]. - The EBITDA margin for the company was 29.1%, compared to 30.9% in Q1 2019 and 34.0% in Q4 2024 [1][2]. Market Trends - The company is facing intensified competition in the gaming industry, with a noticeable trend towards individual customers. To adapt, the company is increasing the number of slot machines to enhance coverage of long-tail customers [3][4]. - The company plans to invest USD 700-800 million in 2025-2026 for the development of entertainment centers and performance projects to enhance the overall resort experience [3][4]. Valuation Adjustments - The target price has been adjusted down to HKD 6.80, reflecting a 7% discount based on the average EV/EBITDA of 8.4x for Hong Kong gaming companies. The adjusted EBITDA forecast for 2025 and 2026 has been reduced by 3.4% and 3.7%, respectively [4][5].

Market Overview - Hong Kong stocks opened significantly higher but closed with a slight increase of 0.13% in the Hang Seng Index, indicating a lack of sustained investor enthusiasm despite positive catalysts [1] - The People's Bank of China announced a 0.5 percentage point reduction in the reserve requirement ratio, expected to inject approximately 1 trillion yuan into the market, alongside a 0.1 percentage point cut in policy interest rates to 1.4% [3] Industry Insights - The relationship between China and Europe is beginning to improve, with both sides agreeing to lift restrictions on mutual exchanges, potentially benefiting sectors like power batteries and wind power components [2] - Companies like Goldwind Technology (02208) are seeing an increase in overseas orders, which now account for 14% of total backlog, indicating a growing market share in international markets [2] Company Developments - China Gold International (02099) reported a significant turnaround with a 64.69% increase in revenue and a 346% rise in net profit for 2024, driven by rising gold and copper prices and the resumption of production at the Jiama mine [8] - The company plans to distribute a special dividend of $0.03 per share on June 18, 2025, reflecting its improved financial health [8] - Jiama mine's production capacity is expected to increase significantly, with copper production projected to reach 63,000 to 67,000 tons by 2025, alongside a decrease in all-in sustaining costs (AISC) [9] Stock Market Reactions - Major brokerages like CITIC Securities (06030) and Hong Kong Exchanges and Clearing (00388) are expected to benefit from the recent policy changes aimed at supporting capital markets [4] - The market showed a mixed response to the announcements, with some sectors like military and gold stocks performing well, while real estate stocks remained stagnant [4][7]