UOB Kay Hian
13 August 2025
Galaxy Entertainment Group: Strong 2Q25 Results, Optimized Reinvestment, and Sustainable Dividends Drive Bullish Outlook
Company Overview
Galaxy Entertainment Group is a leading developer and operator of integrated resorts, retail, dining, hotel, and gaming facilities in Macau. The company manages three flagship destinations:
- Galaxy Macau: One of the world’s largest integrated destination resorts, situated on Cotai.
- Broadway Macau: A landmark entertainment and food street destination adjoining Galaxy Macau.
- StarWorld Hotel: A five-star luxury hotel located on the Macau Peninsula.
Key stock data as of the report date:
- Share Price: HK\$40.18
- Target Price: HK\$45.00 (up 5% from previous TP HK\$43.00)
- Market Cap: HK\$175.8 billion (US\$22.4 billion)
- Shares Issued: 4,374.9 million
- Major Shareholders: City Lion Profits Corp (22.25%), Lui Che Woo (9.14%), Capital Group Cos Inc/The (4.78%)
- FY25 NAV/Share: HK\$18.32; FY25 Net Cash/Share: HK\$6.17
Recent price performance highlights 4.1% growth over 1 month, 25.6% over 3 months, 35.5% over 6 months, and 30.5% over the last year.
2Q25 Financial Highlights
Galaxy delivered a robust set of results for the second quarter of 2025, outperforming industry averages and demonstrating strong recovery momentum:
| Metric (HK\$m) |
2Q19 |
2Q24 |
1Q25 |
2Q25 |
YoY % Chg |
QoQ % Chg |
% of 2Q19 |
| Net Revenue |
13,174 |
10,918 |
11,202 |
12,044 |
10.3 |
7.5 |
91.4 |
| Adjusted EBITDA |
4,332 |
3,176 |
3,296 |
3,569 |
12.4 |
8.3 |
82.4 |
| Normalised EBITDA |
3,983 |
3,196 |
2,966 |
3,162 |
(1.1) |
6.6 |
79.4 |
| Gross Gaming Revenue (GGR) |
15,198 |
10,340 |
10,937 |
12,009 |
16.1 |
9.8 |
79.0 |
| VIP Revenue |
7,325 |
1,391 |
1,978 |
2,413 |
73.5 |
22.0 |
32.9 |
| Mass Revenue |
7,266 |
8,291 |
8,230 |
8,811 |
6.3 |
7.1 |
121.3 |
| Slot Revenue |
607 |
658 |
729 |
785 |
19.3 |
7.7 |
129.3 |
Key Performance Drivers
- Normalised EBITDA: Up 7% QoQ, reaching HK\$3,162m, though down 1% YoY.
- EBITDA Margin: 26.3%, slightly down 0.2ppt QoQ and 3ppt YoY.
- GGR Market Share: Rose 0.7ppt QoQ to 20.2% in 2Q25, outperforming industry’s 6% QoQ GGR increase.
- VIP Segment: VIP GGR increased 22% QoQ, with rolling chip volume up 20.2% QoQ.
- Mass Segment: Mass GGR rose 7% QoQ, now at 121.3% of 2019 levels.
- Slot Segment: Slot GGR up 8% QoQ, at 129.3% of 2019 levels.
- Balance Sheet: Cash and liquid investments stood at HK\$30.7b, with net position of HK\$30.3b after HK\$0.4b debt.
Detailed Casino Performance
| Property |
Metric |
2Q19 |
2Q24 |
1Q25 |
2Q25 |
YoY % |
QoQ % |
% of 2Q19 |
| Galaxy Macau |
Net Revenue |
9,526 |
8,644 |
9,149 |
10,000 |
15.7 |
9.3 |
105.0 |
| Property EBITDA |
3,235 |
2,782 |
3,016 |
3,325 |
19.5 |
10.2 |
102.8 |
| VIP GGR |
5,501 |
1,287 |
1,941 |
2,391 |
85.8 |
23.2 |
43.5 |
| VIP Rolling Chip Volume |
125,051 |
44,577 |
44,371 |
54,859 |
23.1 |
23.6 |
43.9 |
| Mass GGR |
4,993 |
7,047 |
7,027 |
7,669 |
8.8 |
9.1 |
153.6 |
| Mass Drop Volume |
18,118 |
24,647 |
25,270 |
27,416 |
11.2 |
8.5 |
151.3 |
| Slot GGR |
512 |
524 |
570 |
611 |
16.6 |
7.2 |
119.3 |
| StarWorld Macau |
Net Revenue |
2,756 |
1,323 |
1,242 |
1,171 |
(11.5) |
(5.7) |
42.5 |
| Property EBITDA |
943 |
390 |
350 |
303 |
(22.3) |
(13.4) |
32.1 |
| Mass GGR |
1,730 |
1,207 |
1,174 |
1,112 |
(7.9) |
(5.3) |
64.3 |
| Mass Drop Volume |
8,877 |
7,467 |
6,734 |
7,501 |
0.5 |
11.4 |
84.5 |
| Slot GGR |
40 |
113 |
146 |
162 |
43.4 |
11.0 |
405.0 |
| Broadway Macau |
Net Revenue |
147 |
54 |
46 |
51 |
(5.6) |
10.9 |
34.7 |
| Broadway Macau |
Property EBITDA |
6 |
8 |
2 |
4 |
(50.0) |
100.0 |
66.7 |
| City Club |
Net Revenue |
29 |
57 |
42 |
42 |
(26.3) |
0.0 |
144.8 |
| City Club |
Property EBITDA |
29 |
5 |
1 |
2 |
(60.0) |
100.0 |
6.9 |
Stock Impact and Strategic Updates
- Mass market share increased by 0.8ppt QoQ to 22.0%, though investors considered this modest due to lower hold rates. StarWorld’s hold rate was 14.8%, below its historical range due to lower premium mass segment volume. Galaxy Macau’s hold rate was about 1ppt below the company’s norm, but has been normalizing.
- Mass reinvestments remained flat QoQ, with management expecting further optimization as Capella’s opening demonstrated a positive impact during its soft launch.
- Retail sales volume stayed flat YoY, while rental income increased by about 1%. Certain sectors saw moderate growth in June-July due to the summer season. Galaxy Macau modernized specific Phase I areas to attract mid- to lower-end consumers.
- The company declared an interim dividend of HK\$0.70/share, representing a 58% payout ratio, and expects the level to remain sustainable at around 60% despite planned capital expenditures.
Earnings Revision and Valuation
- 2025/26 EBITDA forecasts have been raised by 5% and 4%, respectively.
- Maintained BUY rating; target price revised upward by 5% to HK\$45.00 based on a 12.0x target EV/EBITDA ratio. The stock currently trades at 11.4x 2025F EV/EBITDA.
Key Financials and Ratios
| Year to Dec (HK\$m) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
35,684 |
43,432 |
49,171 |
53,227 |
56,351 |
| EBITDA |
9,955 |
12,188 |
14,184 |
15,449 |
16,537 |
| Operating Profit |
6,145 |
7,858 |
9,820 |
10,704 |
11,411 |
| Net Profit (Adj.) |
6,828 |
8,759 |
10,770 |
11,633 |
12,325 |
| EPS (HK\$ cent) |
156.0 |
200.0 |
246.0 |
266.0 |
282.0 |
| Dividend Yield (%) |
0.5 |
3.2 |
4.2 |
4.2 |
4.2 |
| Net Margin (%) |
19.1 |
20.2 |
21.9 |
21.9 |
21.9 |
| ROE (%) |
10.1 |
11.9 |
13.7 |
14.1 |
14.1 |
Balance Sheet and Cash Flow Overview
- Total Assets (2025F): HK\$99,958m
- Net Cash Position: HK\$19,205m (2025F)
- Shareholders’ Equity (2025F): HK\$80,152m
- Dividend Payments (2025F): HK\$6,563m
- Net Cash Outflow (2025F): HK\$1,189m
Key Metrics and Outlook
| Metric (%) |
2024 |
2025F |
2026F |
2027F |
| EBITDA Margin |
28.1 |
28.8 |
29.0 |
29.3 |
| Pre-tax Margin |
20.6 |
22.4 |
22.4 |
22.4 |
| Net Margin |
20.2 |
21.9 |
21.9 |
21.9 |
| ROA |
9.7 |
11.6 |
12.2 |
12.6 |
| ROE |
11.9 |
13.7 |
14.1 |
14.1 |
| Turnover Growth |
21.7 |
13.2 |
8.2 |
5.9 |
| EBITDA Growth |
22.4 |
16.4 |
8.9 |
7.0 |
| Net Profit Growth |
28.3 |
23.0 |
8.0 |
5.9 |
| EPS Growth |
28.2 |
23.0 |
8.0 |
5.9 |
| Net Debt/(Cash) to Equity |
(38.2) |
(34.4) |
(31.3) |
(29.6) |
Conclusion
Galaxy Entertainment Group’s 2Q25 results showcase its resilience and ability to outperform industry growth rates, driven by strong mass and slot segment recoveries, prudent reinvestment strategies, and a healthy balance sheet. With a consistent dividend policy and further optimization expected from Capella’s opening, Galaxy remains a top pick in the Macau gaming space. The stock’s upwardly revised target price and favorable trading multiples further support a bullish stance for investors seeking both growth and income.
Disclosure and Analyst Certification
This article is based on research published by UOB Kay Hian, which certifies the independence and accuracy of the analysis. All regulatory, distribution, and analyst certifications are in place per country-specific requirements.
