3Q23: Luck-adjusted EBITDA In Line; Expect Higher Opex To Meet Growing Demand
3Q23 luck-adjusted EBITDA is in line with our and consensus estimates. GGR growth outperformed the market in 3Q23, thanks to new property launches and the number of concerts held. Galaxy has gained more market share qtd, with mass GGR exceeding 10- 20% vs 2019’s level. To better satisfy growing demand in 4Q23, we expect Galaxy to incur a higher opex, as well as to reallocate tables from the Peninsula to Galaxy Macau. Maintain BUY. Trim target price to HK$57.00 as we lift 2024 opex assumptions.
- 3Q23 luck-adjusted EBITDA in line with our expectation. Galaxy Entertainment Group (Galaxy) reported adjusted EBITDA of HK$2,768m in 3Q23 (+12% qoq; 67% of 3Q19’s), which was 3% below our and consensus’ estimates. On a luck normalised basis, adjusted EBITDA was HK$2,890m, 1% above our and consensus’ estimates.
- Mass GGR sequentially grew 18% qoq in 3Q23. Gross gaming revenue (GGR) was HK$8,746m in 3Q23 (+14% qoq; 61% of 3Q19’s), of which VIP/Mass/Slot GGR was HK$813m/HK$7,441m/HK$492m (-13% qoq/+18% qoq/+11% qoq; 13%/102%/77% of 3Q19’s), respectively. Revenue from mall rental in 3Q23 was HK$379m (114% of 2019’s level).
- Solid cash position. As of end-Sep 23, cash and liquid investments stood at HK$24.8b (vs HK$24.4b as of end-Jun 23). Net cash position was higher at HK$23.3b (vs HK$22b as of end-Jun 23).