GGR's market share fell slightly from the previous month, and the retail business performed well: 2Q21 achieved gross gaming revenue of HK $4.806 billion, up 3.6 per cent from the previous month. Of this total, the transcoding value of VIP business was HK $36.708 billion, down 20.7% from the previous month, but benefiting from a higher win rate (2Q21 4.6% vs 1Q21 3.8%), VIP business gross revenue was HK $1.694 billion, down 4.3% from the previous month. Gross revenue from the midfield business was HK $2.921 billion, up 6.4 per cent from a month earlier. Revenue from non-gaming business was HK $791 million, up 32.3% from a month earlier, mainly due to the strong performance of the retail business. Retail revenue hit an all-time high in May.

EBITDA in the second quarter was in line with expectations: 2Q21's adjusted EBITDA was HK $1.132 billion, an increase of 31.8% from the previous quarter. After normalization, the adjusted EBITDA was HK $1.058 billion, an increase of 53.3% over the previous month. 2Q21's daily operating expenses are $2.4 million, up slightly from $2.3 million for 1Q21, but still down significantly from $3.4 million before the outbreak. Due to effective cost control and excellent performance of the retail business, the company's EBITDA will be able to become a regular employee when GGR returns to about 20% before the outbreak. Despite the impact of a new outbreak in Guangdong Province in June, the company's EBITDA in June was still positive.

Galaxy Macau Phase 3 will open early next year: the first phase of the Galaxy Phase 3 Raffles Hotel is expected to open early next year (previously planned to open at the end of this year or early next year), with about 450 full suites. With the recovery of the convention and exhibition industry and the entertainment market, the second phase of the Galaxy International Convention Center and the Andas Hotel will open. In addition, the company is continuing to promote the fourth phase of the Galaxy project in Macau. At the same time, the company is also closely monitoring the progress of cooperation between Macau and Hengqin, and so far has not made a large-scale investment in Hengqin.

In the Japanese market, the company has announced that it will no longer participate in the RFP process of Yokohama Integrated Resort, but reiterated that it is still interested in Japanese gambling.

Earnings forecasts and investment ratings: we expect the company's total revenue for 21-23 years to be HK $26.287 billion, HK $52.372 billion and HK $65.941 billion, and the company's EBITDA to be HK $4.317 billion, HK $15.031 billion and HK $203.87 billion. We give 22-year EV/EBITDA 16.4x (twice the standard deviation of the historical center) with a fair value of HK $63.9 per share, maintaining a "recommended" rating.

Risk tips: the risk of repeated outbreaks in the mainland; the risk of tightening foreign exchange controls; and the risk of renewal of gambling licences.