Galaxy’s better-than-expected fourth quarter recovery is impressive, leading to net profit of HKD 1.3 billion in full year 2021, compared to net losses seen at its Macao peers.
We believe this reflects the firm’s premium asset quality and best-in-class management, which is allowing Galaxy to attract more premium mass gaming visitors as the VIP segment remains sluggish. The firm also declared a special dividend of HKD 0.30 per share, which is a nice surprise, coming in a year earlier than we expected.
Management expects Macao’s recovery to be gradual but choppy in the near term, and as such, the opening of Galaxy Macau phase 3 will probably be delayed by another year to the end of 2022 or early 2023. While we like the long-term outlook for Galaxy, we think the good news is largely reflected in its current share price.
We maintain our constructive view on Macao's long-term gaming demand, despite the near-term hurdles on the sharply rising omicron cases. In a worst-case scenario of a further two-year delay in Macao’s recovery, assuming gaming sector revenue remains at 30% of the 2019’s levels, fair value estimate of Galaxy would be lowered to HKD 42.00 per share from HKD 49.50.
Do you guys think it is a good buy opportunity now?
If you wish to leverage on this consider using DLCs:
5x short $Galaxy 5xShortSG221215(DXHW.SI)$
5x long $Galaxy 5xLongSG221013(DLBW.SI)$
Comments
Like