UOB Kay Hian
August 13, 2025
Galaxy Entertainment Group: Robust 2Q25 Performance, Sustainable Dividends, and Optimized Reinvestment Set Stage for Growth
Company Overview: Galaxy Entertainment Group
Galaxy Entertainment Group (HK: 27) is a leading developer and operator of integrated resort, retail, dining, hotel, and gaming facilities in Macau. The company boasts three flagship destinations: Galaxy Macau and Broadway Macau in Cotai, and StarWorld Hotel on the Peninsula. Galaxy Macau is among the world’s largest integrated resorts, while Broadway Macau delivers a unique entertainment and dining experience. StarWorld Hotel is an award-winning five-star luxury hotel.
- Share Price: HK\$40.18
- Target Price: HK\$45.00 (up from HK\$43.00)
- Upside Potential: +12.0%
- Market Cap: HK\$175.8 billion (US\$22.4 billion)
- Shares Issued: 4,374.9 million
- GICS Sector: Consumer Discretionary
- Bloomberg Ticker: 27 HK
Shareholder Structure and Performance
- Major Shareholders:
- City Lion Profits Crop: 22.25%
- Lui Che Woo: 9.14%
- Capital Group Cos Inc/The: 4.78%
- 52-week High/Low: HK\$43.80 / HK\$24.30
- Price Performance:
- 1 Month: +4.1%
- 3 Months: +25.6%
- 6 Months: +35.5%
- 1 Year: +30.5%
- Year to Date: +21.8%
2Q25 Results Recap: EBITDA Growth, Dividend Sustainability, and Market Share Expansion
EBITDA & Revenue: Galaxy Entertainment delivered strong results in 2Q25, with normalised EBITDA rising 7% quarter-on-quarter. Key metrics include:
| Year to Dec 31 (HK\$m) |
2Q19 |
2Q24 |
1Q25 |
2Q25 |
YoY % |
QoQ % |
% 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 |
15,198 |
10,340 |
10,937 |
12,009 |
16.1 |
9.8 |
79.0 |
Dividend: An interim dividend of HK\$0.70 per share was declared, reflecting a payout ratio of 58%. Management expects the payout ratio to remain sustainable at around 60%, even with planned capital expenditures for future projects.
Gaming Segment Analysis: Market Share, VIP Growth, and Mass Performance
- GGR Market Share: Galaxy’s GGR market share increased 0.7 percentage points quarter-on-quarter to 20.2%, outperforming the industry’s GGR growth rate. GGR recovered to 79% of 2019 levels (up from 71% in 1Q25).
- VIP Segment:
- VIP GGR surged 22% QoQ, now at 33% of 2019’s level.
- VIP rolling chip volume jumped 20% QoQ to 55,764 million.
- VIP win rate held steady at 4.3%.
- Mass Market:
- Mass GGR rose 7% QoQ, reaching 121% of 2019’s level.
- Mass drop volume up 9% QoQ to 35,076 million.
- Hold rate normalized to 25.1%.
- Slot Revenue: 8% QoQ increase, 129% of 2019’s level.
Reinvestment Efficiency and Retail Segment Insights
- Mass Reinvestments: Remained flat QoQ, with management focusing on efficiency. Capella’s opening is expected to further enhance reinvestment effectiveness in an intensely competitive market.
- Retail Volume: Retail sales volume stayed flat YoY, but rental income rose 1%. Some sectors benefited moderately from the summer season. Galaxy Macau modernized Phase I, targeting more mid-to-lower consumer products.
Financial Health: Cash Position and Balance Sheet Strength
- Liquidity: As of June 2025, cash and liquid investments reached HK\$30.7 billion, with net cash position at HK\$30.3 billion after HK\$0.4 billion debt.
- Balance Sheet (selected figures):
- Fixed Assets (2025F): HK\$61,462 million
- Cash/ST Investment (2025F): HK\$19,205 million
- Shareholders’ Equity (2025F): HK\$80,152 million
- Net Debt/(Cash) to Equity (2025F): -34.4%
Key Financials and Valuation Metrics
| Year to Dec 31 |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (HK\$m) |
35,684 |
43,432 |
49,171 |
53,227 |
56,351 |
| EBITDA (HK\$m) |
9,955 |
12,188 |
14,184 |
15,449 |
16,537 |
| Net Profit (adj., HK\$m) |
6,828 |
8,759 |
10,770 |
11,633 |
12,325 |
| EPS (HK\$ cent) |
156.0 |
200.0 |
246.0 |
266.0 |
282.0 |
| PE (x) |
25.8 |
20.1 |
16.3 |
15.1 |
14.2 |
| EV/EBITDA (x) |
16.4 |
13.1 |
11.4 |
10.5 |
9.8 |
| Dividend Yield (%) |
0.5 |
3.2 |
4.2 |
4.2 |
4.2 |
| Net Margin (%) |
19.1 |
20.2 |
21.9 |
21.9 |
21.9 |
Individual Casino Performance Breakdown
| Casino |
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 |
| Mass GGR |
4,993 |
7,047 |
7,027 |
7,669 |
8.8 |
9.1 |
153.6 |
| Slot GGR |
512 |
524 |
570 |
611 |
16.6 |
7.2 |
119.3 |
| Mass Drop Volume |
18,118 |
24,647 |
25,270 |
27,416 |
11.2 |
8.5 |
151.3 |
| Slot Handle |
11,235 |
14,772 |
16,333 |
18,435 |
24.8 |
12.9 |
164.1 |
| 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 |
| Slot GGR |
40 |
113 |
146 |
162 |
43.4 |
11.0 |
405.0 |
| Mass Drop Volume |
8,877 |
7,467 |
6,734 |
7,501 |
0.5 |
11.4 |
84.5 |
| Slot Handle |
1,967 |
6,325 |
8,351 |
9,284 |
46.8 |
11.2 |
472.0 |
| EBITDA Margin (%) |
34.2 |
29.5 |
28.2 |
25.9 |
(3.6) |
(2.3) |
– |
| Broadway Macau |
Net Revenue |
147 |
54 |
46 |
51 |
(5.6) |
10.9 |
34.7 |
| 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 |
| Property EBITDA |
29 |
5 |
1 |
2 |
(60.0) |
100.0 |
6.9 |
Profitability, Growth, and Leverage Metrics
- EBITDA Margin (2025F): 28.8%
- Net Margin (2025F): 21.9%
- ROA (2025F): 11.6%
- ROE (2025F): 13.7%
- Turnover Growth (2025F): 13.2%
- Net Debt/(Cash) to Equity (2025F): -34.4%
Valuation and Recommendation
- Rating: BUY (maintained)
- Target Price: HK\$45.00 (raised by 5%)
- Valuation Basis: 12.0x target EV/EBITDA
- 2025F EV/EBITDA: 11.4x
- 2025/26 EBITDA Forecasts: Raised by 5%/4%
Conclusion: Investment Outlook Remains Positive
Galaxy Entertainment Group’s 2Q25 performance highlights strong execution, robust cash generation, and impressive market share gains, especially in mass and VIP gaming segments. With sustainable dividend payouts, a healthy balance sheet, and ongoing reinvestment optimization (especially with Capella’s opening), Galaxy is well-positioned for continued growth. Investors can expect resilient returns and stable long-term value as the company leverages its industry leadership and prudent financial management.
