not vested
Galaxy Entertainment – Hopeful revaluation will take place in 2H14
Rating: Accumulate
Closing price: 62.95
Target price: 72.00
In 2014Q1, the revenue increased to 20.2 billion HKD, with a 33% increase yoy, and EBITDA has grown by the adjusted growth rate of 38%, which primarily benefited from the adjusted 44% growth yoy of EBITDA of Macao Galaxy and 26% of EBITDA of Star World Hotel Macao;
The gaming revenue data is increasingly weakening in Macao, but the continued growth of the inbound tourists and the structural changes of the betting customers, the proceed growth of Macao's gambling is expected to hit bottom in the future months;
Galaxy Entertainment will launch two important projects in 2015, including Macao Galaxy's Phase 2 Project and the refurbishment of Golden City Comprehensive Buildings, both are intended to be launched in the first-half of 2015;
We expect that the opening of the Galaxy Phase Two will attract the second coming rapid growth of the business. GEG has excellent management implementation capacity and relatively high assets quality, as well as a strong momentum for medium and long term profit growth.
We give GEG “Accumulate” rating, with 12m TP at HK$72, 20.4x expected P/E ratio in 2015.
Source: Phillips