[ET Net News Agency, 5 December 2018] UBS Global Research lowered its target price for
Galaxy Entertainment (00027) to HK$62.5 from HK$66 and maintained its "buy" rating.
The research house lowered its Macau gaming sector GGR growth assumptions from 5% to -1%
YoY for 2019, given more cautious VIP and premium mass outlooks.
It expects a continuation of Galaxy's operating outperformance, which has surprised to
the upside over the past two years. This reflects management's ability to continue
optimising its business mix and cost base, in light of increasingly competitive supply and
a slowing overall environment.
Beyond the near term, Galaxy has clear growth options, with Galaxy Macau Phases 3 and 4
expansion scheduled to open over the next two to four years, which could double its hotel
room inventory, UBS said. It believes these are not in the price, with Galaxy trading on
11.6x 2019 EV/EBITDA, a discount of about 13% versus its historical average of 13.3x. (KL)