Goldman Sachs: It is expected that GALAXY ENT(00027) has sufficient financial capability to further increase dividends. The target price is lowered to 53.4 Hong Kong dollars.

Goldman Sachs released a research report stating that GALAXY ENT (00027) announced its full-year performance as of the end of December yesterday (26th). The quarterly performance was strong as expected by Goldman Sachs, with EBITDA increasing by 29% quarterly to 4.3 billion Hong Kong dollars, meeting the bank's expectations and above the market consensus range of 3.6 billion to 4.3 billion Hong Kong dollars. The "buy" rating is maintained. The group declared a final dividend of 0.8 Hong Kong dollars per share, equivalent to 64% of the profit distribution ratio for the second half of 2025, further increasing from 58% in the first half of 2025 and 50% in the 2024 fiscal year. Management stated that they intend to distribute at least 65% of profits in the future. Goldman Sachs believes that the group has sufficient financial capacity to further increase dividends, or adopt a progressive dividend policy like Sands China (01928), as the 18 billion Hong Kong dollars of capital expenditure balance for Galaxy Macau Phase 4 can be fully covered by its strong free cash flow and 35 billion Hong Kong dollars of net cash reserves. Goldman Sachs noted that the upcoming National People's Congress and the Chinese People's Political Consultative Conference from March 4th to 11th may potentially impact gaming and tourism demand. In terms of performance, Goldman Sachs slightly adjusted its EBITDA forecast for the 2026-27 fiscal years by less than 1%, and revised its 12-month target price from 54 Hong Kong dollars to 53.4 Hong Kong dollars based on the sum of valuation by category. Goldman Sachs also pointed out that although the group has achieved its target market share of 22% in the mid-term gaming revenue market, considering the continued progress of the third phase project (such as Japer Hotel), the refurbishment of StarWorld Hotel, and the phased opening of Galaxy Macau Phase 4 from next year, there is still room for further growth in market share. The stock is currently not highly valued, equivalent to a multiple of 10 times the forecast enterprise value for the 2026 fiscal year.