[ET Net News Agency, 23 July 2020] J.P. Morgan raised its target price for Galaxy
Entertainment (00027) to HK$68.5 from HK$66 and maintained its "overweight" rating.
With the Guangdong-Macau travel bubble in place, the research house now modeled industry
GGR (gross gaming revenue) to return to normal levels by 3Q of 2021 on its assumption that
major travel curbs would be gradually eased by end of 2020.
JPM continues to see Galaxy as the best way to play Macau's mid- to long-term
opportunities. First, Galaxy still offers the most attractive growth pipeline, with its
Galaxy Macau Phase III and IV projects that will double its capacity (hotel, GFA, gaming
area, etc.), allowing it to get the "last bite of the apple" as Macau's final projects
under the current concession. JPM forecast these projects can lift the group's EBITDA by
at least 50% when ramped-up (2023 versus 2019).
Second, it has confidence in Galaxy's execution, considering the repeatedly proven
track record, best-in-class management, and robust relationship with governments as a "de
facto local champion."
Third, JPM noted that the stock only trades at 11x trailing EBITDA (2019), providing an
attractive opportunity for those who can do a buy-and-hold strategy to ride Galaxy's
secular growths. (KL)