Galaxy Earnings: Solid Recovery Continues, Special DPS a Nice Surprise

Although Galaxy’s June-quarter adjusted EBITDA of HKD 2.47 billion was slightly behind Bloomberg consensus, we think performance is positive, continuing to reflect a solid recovery, with revenue and adjusted EBITDA returning to 66% and 57% of pre-COVID 2019 levels, from 54% and 48% in the prior quarter. The special dividend of HKD 0.20 per share is a nice surprise, reflecting management’s confidence in the profit growth outlook. Management also sees strong momentum into the third quarter, with quarter-to-date mass drop volume 20% above the level in 2019. This is impressive, and 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.