Core ideas:
The company disclosed 21Q2 results. The company's 21Q2 net income (excluding gaming commissions, including non-gaming revenue and building materials income) was HK $5.565 billion, an increase of nearly 400 per cent over the same period last year and a slight increase of 9.2 per cent from the previous month. In terms of gambling business, 21Q2's gross gaming revenue (GGR) was HK $4.81 billion, up 3.6% from the previous month and returning to 32.8% of 19Q2. In terms of business, the recovery of the company's midfield business is better than that of the VIP business. 21Q2 midfielder GGR recorded HK $2.92 billion, up 6.4% from the previous month, while the VIP GGR of 43% of 19Q2 was HK $1.69 billion, down 4.3% from the previous month and only 23.2% of 19Q2. The EBITDA of 21Q2 Company was HK $1.132 billion, an increase of 31.8% over the previous month. In addition, the company's 21Q2 net profit has become a regular one, making it the only one of the six Macau gaming companies to make a profit.
The retail business performed well: five of the highest retail revenues in history were in 2021, with retail revenue hitting an all-time high in May this year. Due to the strong performance of the retail business, the company's EBTIDA break-even point has declined significantly. When GGR reaches 20% of the level before the epidemic, EBITDA can become a regular worker. The opening time of Galaxy Phase III in Macau:
According to the company's performance disclosure, after the future rebound in MICE business and visitors, Raffles Hotel will open with GICC (Galaxy International Conference Center) and Anders Hotel, which is expected to open in early 2022; cost control: the company's operating expenses decreased from US $3.4 million / day before the outbreak to US $2.4 million / day for 21Q2, an increase of US $100000 / day over 21Q1, and cost control is sustainable.
Profit forecast and investment suggestions: the epidemic will still have a great impact on the operation of Macao's gaming industry in 2021, but the gaming industry has a monopoly attribute, and the competition pattern is stable. With the gradual reduction of the impact of the epidemic, the industry will further recover. We value the company based on the 2022 EBITDA forecast of HK $16.85 billion. Macau's gaming industry is still in the recovery cycle, the company has obvious operational efficiency advantages, and the new property Galaxy Macau Phase III is about to open. We give the company a 22-year 14.0xEV/EBITDA (slightly higher than the historical average of 13.3x), corresponding to a fair value of HK $60.90 per share, maintaining a "buy" rating.
Risk hint. The risk of the spread of the epidemic; the risk of tightening foreign exchange controls; the risk of renewal of gambling licences