CICC: Maintaining Galaxy Entertainment's (00027) “Outperform the Industry” rating target price of HK$34.80, the third quarter results are in line with expectations

The Zhitong Finance App learned that CICC released a research report stating that maintaining Galaxy Entertainment's (00027) “outperforming the industry” rating and target price of HK$34.80 is equivalent to 9 times EV/EBITDA in 2026 (treating financial assets as cash). The bank kept the company's 2026 and 2027 EBITDA forecasts unchanged. Galaxy Entertainment's adjusted EBITDA for the third quarter of 2026 was HK$3,688 billion, up 10% year-on-year and 9% month-on-month, in line with Visible Alpha's agreed expectations of HK$3,633 billion. The bank believes that the company's performance mainly benefits from the gaming business's high win rate.

CICC's main views are as follows:

Q3 2026 results meet Visible Alpha's consistent expectations

Galaxy Entertainment announced results for the third quarter of 2026, with net revenue of HK$12.692 billion, up 4% year on year and 7% month on month, returning to 100% of the third quarter level of 2019; adjusted EBITDA was HK$3,688 billion, up 10% year on year and 9% month on month, returning to 90% of the level for the third quarter of 2019, in line with Visible Alpha's agreed expectations of HK$3,633 billion.

The bank believes that Galaxy Entertainment's performance mainly benefited from the gaming business's high win rate. The VIP win rate in the third quarter of 2026 was 4.75%, up from 3.07% in the second quarter of 2026.

Gaming revenue is expected to decline year-on-year in October. Continue to focus on operating profit margins

Management pointed out that during the 2026 National Day holiday, the company's total gaming revenue remained roughly the same year over year after adjusting the win rate to a normalized level, but gaming revenue performance declined markedly after the holiday ended. As a result, the bank expects Galaxy Entertainment's gaming revenue to decline year-on-year in October 2026.

Although the industry's gaming revenue continues to be pressured and market competition is still fierce, the bank expects the company to continue to maintain operating discipline and focus on maintaining EBITDA profit margins.

The fourth phase of the project's new gambling quota has yet to be clarified. It is planned to build a theme park in the future

Management disclosed that it has not received any guidance or approval from the government for the fourth phase of the project to add gambling table quotas. The bank believes that it may not be clear until the fourth phase of the project will be approved when it opens closer to 2028.

Management also revealed that the company plans to build a theme park next to Galaxy Phase I after the fourth phase of project development is completed.

Risk Alerts

New property sales fell short of expectations; construction progress fell short of expectations; increased competition may cause loss of market share.