First Shanghai issued a research report maintaining a "Buy" rating on GALAXY ENT (00027) with a target price of HK$50.06. The group boasts strong products and services, along with the most robust balance sheet in the industry. Future growth drivers include the Cotai Phase 4 project, Hengqin development, and potential overseas expansions. With further product launches and enhancements—particularly the Capella Hotel and Resort—the bank expects the group to continue gaining market share.
**Q3 2025 Performance Overview** GALAXY ENT's net revenue rose 14.0% YoY and 1.0% QoQ to HK$12.16 billion (recovering to 95.7% of 2019 levels). VIP rolling chip turnover surged 46.28% YoY and 16.6% QoQ (39.7% of 2019 levels), while mass gaming revenue grew 12.8% YoY and 7.4% QoQ (129.3% of 2019 levels). Adjusted EBITDA increased 13.6% YoY but declined 6.4% QoQ to HK$3.34 billion (81.3% of 2019 levels), with an EBITDA margin of 27.5% (down 0.1% YoY and 2.2% QoQ). Typhoon disruptions in September impacted results by approximately HK$140 million. Overall performance met expectations, with a solid net cash position of HK$34.8 billion.
**Galaxy Macau and StarWorld Performance** Net revenue at Galaxy Macau rose 20% YoY and 1% QoQ to HK$10.1 billion (108% of 2019 levels), while StarWorld’s revenue fell 6% YoY but grew 8% QoQ to HK$1.3 billion (50% of 2019 levels). Adjusted EBITDA for the two properties stood at HK$3.07 billion (+20% YoY, -8% QoQ) and HK$370 million (-7% YoY, +22% QoQ), recovering to 97% and 45% of 2019 levels, respectively. EBITDA margins were 30.4% and 29.2%, with hotel occupancy rates at 98% and 99%.
**Updates on Galaxy Macau Phases 3 & 4** Most facilities at Capella Hotel and Resort—Galaxy Macau’s tenth hotel brand—are now operational, receiving positive customer feedback. The remaining features, including a specialty restaurant, are expected to launch in early 2026. Construction on Phase 4 continues, targeting completion in 2027. The 600,000 sqm project will introduce multiple luxury hotel brands new to Macau, alongside a 5,000-seat theater, diverse F&B, retail, non-gaming amenities, and water-themed attractions. Full-year capex is projected to be significantly below the initial HK$7 billion budget, with HK$630 million spent in Q3 and ~HK$7 billion earmarked for 2026.
**Recent Developments** Retail performance improved QoQ in Q3. From January–September 2025, the group hosted ~260 entertainment, sports, cultural, and MICE events, boosting Galaxy Macau’s foot traffic by 41% YoY. Industry competition remains manageable. The Waldo Casino ceased operations on October 31, 2025. Daily operating expenses rose 8% QoQ to HK$3.7 million. Market share held steady at ~19.6% in Q3, with near-term expectations around 20%. The Broadway redevelopment will proceed at a later stage.
**Risks** Weaker-than-expected economic growth, policy risks, and competition from peers.
Comments