20130820-美银美林-17__QoQ_improvement__luck-adjusted_Raise_PO_to_HK_50.2_14页_813kb
报告摘要
Galaxy Entertainment Summary
Core Content
Galaxy Entertainment Group Ltd, a company based in Hong Kong, operates casinos in Macau. Originally involved in the construction materials business, it was renamed Galaxy Entertainment in 2005 after the Lui Family sold the casino concession into the company. The company reported a strong 2Q13 performance with an adjusted EBITDA of HK$3.02bn, showing a 17% quarterly improvement on a luck-adjusted basis.
Key Financial Performance
-
Galaxy Macau (GM):
- Adjusted EBITDA: HK$2.09bn (8% QoQ, 34% YoY)
- Mass market revenue: Increased by 48% YoY and 12% QoQ, driven by the Pavilion premium mass product and new electronic terminals
- Net win per mass table: Estimated at US$12K/day
-
StarWorld:
- Adjusted EBITDA: HK$885mn, in line with expectations
- Mass market revenue: Rose by 57% YoY and 7% QoQ, offsetting the slight YoY decline from the VIP segment
-
Construction Materials:
- EBITDA: HK$131mn (-10% YoY), due to softening cement prices
Key Conference Call Takeaways
- Phase 2: On track and on budget to open in 1H15, with Phase 3 & 4 construction potentially starting by the end of 2013 or early 2014, with a budget of HK$50-60bn
- Grand Waldo: Currently suspended and will take 6-9 months to re-launch; tables have been relocated to Galaxy's existing casinos
- Non-Gaming Revenue Decline: In Starworld and GM due to construction disruption and accounting changes related to travel agent revenue
- Net Cash: Approximately HK$5bn after early repayment of HK$3.5bn in bank debt and the first installment of HK$2.6bn for Grand Waldo acquisition
- New VIP Area: GM will have a new VIP area with 12 tables in October
Investment Recommendation
- Price Objective (PO): Raised to HK$50.2 from HK$45.5, implying a 17% upside
- Target Multiple: Maintained at 13x (or 18x PER)
- Investment Opinion: Reiterated as "Buy"
- Volatility Risk: HIGH
Stock Data
- Price: HK$42.90
- Price Objective: HK$50.20
- Market Value: HK$180,473 million
- Average Daily Volume: 9,245,389
- ROE (2013E): 40.7%
- Net Debt to Equity (Dec-2012A): -22.6%
- Est. 5-Yr EPS Growth: 27.5%
- Free Float: 31.2%
- Price to Book Value: 7.2x
Key Changes
| Metric | Previous | Current | Change |
|---|---|---|---|
| Price Objective | HK$45.50 | HK$50.20 | +5.0% |
| 2013E Revenue (m) | 61,098.3 | 63,933.7 | +5.0% |
| 2014E Revenue (m) | 64,605.8 | 70,813.6 | +10.0% |
| 2015E Revenue (m) | 71,778.1 | 84,682.4 | +18.0% |
| 2013EPS | 2.11 | 2.24 | +6.0% |
| 2014EPS | 2.39 | 2.76 | +15.0% |
| 2015EPS | 2.77 | 3.60 | +30.0% |
Valuation Summary
- P/E (2013E): 19.1x
- Adjusted EV/EBITDA (2013E): 13.0x
- Free Cash Flow Yield (2013E): 3.95%
- EV/EBITDA (2014E): 10.9x
- Free Cash Flow Yield (2014E): 1.65%
- EV/EBITDA (2015E): 8.6x
- Free Cash Flow Yield (2015E): 1.19%
Investment Thesis
Galaxy Entertainment is recommended as a "Buy" due to:
- Continuous ramp-up of Galaxy Macau
- Strong fundamentals and execution capability
- Potential upside from the opening of Phase 2 in 2015 and Phase 3 & 4 between 2016 and 2018
Price Objective Calculations
- Enterprise Value (2014E EBITDA): HK$140,247 million
- Less: YE 2013 Net Debt: HK$3,075 million
- Adjusted Equity Value: HK$183,298 million
- Shares Outstanding: 4,255 million
- Price Objective: HK$50.20
- Upside: 17.0%
EBITDA Summary
| Segment | 2010 | 2011 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | 2012E | 1Q13E | 2Q13E | 3Q13E | 4Q13E | 2013E | 2014E | 2015E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| StarWorld EBITDA | 2,037 | 2,955 | 852 | 906 | 843 | 646 | 3,247 | 861 | 885 | 932 | 936 | 3,614 | 3,906 | 3,932 |
| City Club EBITDA | 158 | 183 | 43 | 39 | 39 | 42 | 163 | 46 | 48 | 40 | 40 | 174 | 160 | 150 |
| Construction Materials EBITDA | 348 | 433 | 83 | 145 | 113 | 118 | 459 | 60 | 131 | 50 | 50 | 411 | 452 | 475 |
| Galaxy Macau EBITDA | - | 2,581 | 1,304 | 1,565 | 1,757 | 1,870 | 6,496 | 1,929 | 2,090 | 2,154 | 2,198 | 8,370 | 10,089 | 13,711 |
Global Gaming Valuation Comps
| Company | Price (HKD) | Market Cap (US$bn) | EV/EBITDA (2013E) | EV/EBITDA (2014E) | EV/EBITDA (2015E) | P/E (2013E) | P/E (2014E) | P/E (2015E) | FCF Yield (2013E) | FCF Yield (2014E) | FCF Yield (2015E) | Dividend Yield (2013E) | Dividend Yield (2014E) | Dividend Yield (2015E) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Galaxy Entertainment | 42.9 | 23.31 | 13.0 | 10.9 | 8.6 | 19.1 | 15.6 | 11.9 | 4% | 2% | 1% | 0% | 0% | 0% |
| SJM Holdings | 19.1 | 13.70 | 15.1 | 11.7 | 10.8 | 22.0 | 16.2 | 13.3 | 4% | 5% | 5% | 3% | 3% | 4% |
| Wynn Macau | 20.9 | 13.98 | 13.4 | 13.9 | 13.6 | 22.2 | 18.3 | 14.0 | -1% | 2% | 5% | 0% | 0% | 0% |
| Sands China | 42.8 | 44.47 | 17.3 | 13.4 | 11.1 | 22.3 | 12.6 | 10.7 | 6% | 0% | -7% | 0% | 0% | 0% |
| Melco Crown | 27.1 | 15.03 | 11.8 | 10.4 | 8.3 | 22.2 | 18.3 | 14.0 | -1% | 2% | 5% | 0% | 0% | 0% |
| MGM China | 22.5 | 11.00 | 12.7 | 11.7 | 10.9 | 16.1 | 14.4 | 13.0 | 7% | 4% | 2% | 3% | 4% | 4% |
| Average (Asia) | - | - | 11.3 | 10.1 | 9.0 | 18.1 | 15.6 | 13.6 | 4.7% | 3.4% | 3.5% | 2.9% | 2.9% | 3.0% |
| Average (US) | - | - | 14.4 | 12.6 | 11.1 | 20.2 | 17.8 | 16.2 | 6% | 6% | 7% | 2% | 2% | 2% |
Conclusion
Galaxy Entertainment Group Ltd has demonstrated strong performance in Q2 2013, with a 17% QoQ improvement in adjusted EBITDA. The company is expected to benefit from the opening of Phase 2 in 2015 and future phases, which are projected to contribute significantly to its growth. The revised price objective of HK$50.20 suggests a 17% upside, reinforcing the "Buy" recommendation. Key drivers include the mass market growth, solid fundamentals, and strategic expansion plans.
试读结束，高清完整版pdf/doc/ppt,请点下载