CICC published a research report indicating it has kept its EBITDA forecasts for Galaxy Entertainment (00027) for 2026 and 2027. The stock currently trades at 9 times the 2026 EV/EBITDA (treating financial assets as cash). The firm has maintained its Outperform rating and a target price of HK$38.00, which corresponds to 10 times the 2026 EV/EBITDA (treating financial assets as cash). This target price implies an 11% upside from the current share price.
The key points from CICC are as follows: The 2Q26 results were in line with the company's expectations. Galaxy Entertainment reported its 2Q26 results: revenue of HK$11.835 billion, a 2% year-on-year decline and a 5% quarter-on-quarter decline, recovering to 90% of the 2Q19 level. Adjusted EBITDA came in at HK$3.380 billion, down 5% both year-on-year and quarter-on-quarter, recovering to 78% of the 2Q19 level, which was largely in line with CICC's forecast of HK$3.367 billion. CICC believes the performance was primarily driven by an increase in market share from 19.9% in 1Q26 to 20.3% in 2Q26, as well as effective operating cost control.
In terms of development trends, following the conclusion of the 2026 World Cup schedule, the premium business segment (VIP and premium mass) rebounded in late July and August 2026. The industry-wide level of rebate and commissions remains competitive but is stabilizing. CICC believes the company's shareholder returns will continue with a dividend-oriented strategy, having announced an interim dividend of HK$0.90 per share, corresponding to a payout ratio of about 75%. However, the company has not committed to a fixed level of dividend per share or payout ratio. Due to geopolitical disturbances and conflicts, Macau and Hong Kong are expected to benefit as tourist destinations. The full renovation of the casino area and hotel rooms at the Grand Lisboa Palace is expected to be completed by 1Q27.
Risk factors include lower-than-expected ramp-up of new properties, slower-than-expected construction progress, and intensified competition leading to market share loss.