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 47.25, representing a potential upside of 48.11% from the current stock price of HKD 31.90 [1]. Core Insights - The company's Q4 2024 performance met expectations, with a year-to-date low double-digit growth forecast. The net revenue for Q4 was HKD 11.29 billion, recovering to 87.1% of the 2019 level, with a year-on-year increase of 9.4% and a quarter-on-quarter increase of 5.9% [2][3]. - The introduction of smart gaming tables and the launch of new products, particularly the Capella Hotel and Resort, are expected to enhance market share. The company has a strong balance sheet with net cash of HKD 27.1 billion, the strongest in the industry [2][3]. Financial Summary - Total net revenue is projected to grow from HKD 35.68 billion in 2023 to HKD 55.18 billion by 2027, reflecting a compound annual growth rate (CAGR) of 10.3% [2][3]. - EBITDA is expected to increase from HKD 9.96 billion in 2023 to HKD 16.89 billion in 2027, with an EBITDA margin improving from 27.9% to 30.6% over the same period [2][3]. - Net profit is forecasted to rise from HKD 6.83 billion in 2023 to HKD 12.62 billion in 2027, with a net profit margin increasing from 19.1% to 22.9% [2][3]. Operational Highlights - The company reported a strong performance in its flagship properties, with net revenues for Galaxy Macau and StarWorld Hotel increasing by 12% and 3% year-on-year, respectively [2]. - The occupancy rates for Galaxy Macau and StarWorld Hotel were reported at 98% and 100%, respectively, indicating robust demand [2]. - The company is advancing its development projects, including the introduction of the Capella Hotel and Resort in mid-2025 and the ongoing construction of the fourth phase of Galaxy Macau, expected to be completed by 2027 [2][3].