报告名称：Galaxy Entertainment Group(00027.HK)2Q15 EBITDA to be dragged by extra costs don
报告类型：港股研究
报告日期：2015-07-07
研究机构：高盛高华
股票名称：银河娱乐
股票代码：00027
页数：9
简介：What's changed
While Galaxy managed to gain 4% GGR market share in June vs. May onnormalized VIP win rate at Starworld and the launch of GM Phase 2 &Broadway on May 27, we expect its 2Q15 results to be dragged by (1) anextra month of salaries for 7,000 new staff hired and trained 4-6 weeksprior to its opening (vs. 17,000 existing); and (2) rent-free period for thenew F&B and retail outlets in initial months. Coupled with poor luck factorsin April-May, we forecast a 20% qoq group EBITDA decline to HK$1.84bnin 2Q, including HK$1.35bn for GM & Broadway and HK$0.5bn forStarworld. Factoring in more conservative assumptions for GM, we lowerour 2015/16/17E EBITDA for the group by 7%/7%/5% and 12m SOTP-basedTP to HK$42.6 (from HK$47.1).
Implications
If 2Q EBITDA falls as we project, it may raise concerns on Ph2’s return andlead to share price volatility. But given revenue/cost mismatch and that itgenerally takes time to ramp up esp. in non-gaming segment, we cautioninvestors not to extrapolate the trend – we forecast HK$2.6/3.0bn groupEBITDA in 3Q/4Q (vs. HK$1.84bn in 2Q). As flagged before, since Ph2 ismarketed only as an extension, it may not create as much novelty effect.
Mgmt. also said not many quality junkets remain amid soft GGR trend andmarket consolidation. On a positive note, GM’s hotel room take-up hasbeen satisfactory with 90+% occupied despite room count doubling. Wewill monitor its market share trend closely. As mentioned in our priorreport, we estimate Ph 2 needs 2-3% GGR share to be EBITDA breakeven.
Valuation
After a 9% rally last week, Galaxy is trading at 14x 2015E EV/EBITDA,above mid-cycle. While we maintain Buy, we see further upside hinging onGGR recovery. The transit visa relaxation should bode well for premiummass segment, which represents 12% of Galaxy’s EBITDA.
Key risks
Worse-than-expected GGR trend and market share takeup for GM Phase 2.

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