Galaxy Earnings: Solid Recovery Underway; Galaxy Macau 3 Likely To Accelerate Sales Growth

In line with its Macao peers, narrow-moat Galaxy witnessed a solid recovery in the first quarter, with revenue and adjusted EBITDA reaching 54% and 48%, respectively, of 2019 levels, despite fewer available rooms from the ongoing labor shortage. Management also indicated improving momentum into the second quarter, with the premium mass drop volume surpassing the level in 2019, and retail sales more than doubling. The decent performance is within our expectation. We think the launch of the Galaxy Macau Phase 3 project, along with continued recovery in transportation capacity, will further accelerate Galaxy’s sales growth in coming quarters. We maintain both our profit forecasts and fair value estimate of HKD 51 per share for Galaxy, and we think the shares are fairly valued as of market close on May 22.