"Large Banks" Huayan slightly raised Galaxy Entertainment's target price to HKD 43.5 and continued to recommend "Buy," as long-term growth prospects improve

HSBC's research report indicates that even with a negative impact of HKD 140 million from Typhoon Haikui, Galaxy Entertainment (00027.HK) still saw a quarter-on-quarter increase of 5% in adjusted EBITDA for the third quarter. Despite fierce competition, its market share remains at around 20%. The group continues to manage costs, with the reinvestment rate in the mid-market business decreasing compared to the previous quarter, and fixed operating expenses remaining roughly flat. Although the promotion costs increased by about 8% quarter-on-quarter due to summer non-gaming activities and the newly opened Capella Hotel, management believes these are one-time expenses.

Management stated that performance in October was strong, and the bank expects the Capella Hotel to continue attracting high-end demand, especially in conjunction with the group's intensive event schedule. It is anticipated that the high-end positioned Phase IV project will further enhance the group's long-term growth prospects; the profit forecast remains unchanged, but due to capital expenditures being lower than expected, the target price has been raised from HKD 43 to HKD 43.5, maintaining a "Buy" rating