Galaxy Entertainment, the world's leading resort, hotel and gaming company, continues to expand its business footprint. Galaxy Entertainment mainly develops and operates a series of integrated resort, retail, catering, hotel and gaming projects in Macau, taking the lead in seizing the development opportunities of the gaming industry in Cotai. The company's profitability has improved steadily in recent years, with an adjusted EBITDA of HK $16.479 billion and an adjusted EBITDA profit margin of 32 per cent in 2019. Revenue affected by the epidemic fell sharply in 2020, and the 21Q1-Q3 epidemic improved, with a total net income of HK $14.943 billion, more than the whole of 2020, of which gambling business realized HK $10.754 billion, accounting for 72%, and non-gambling business realized HK $1.997 billion, accounting for 13.4%. At the same time, the company has abundant cash flow and strong risk tolerance.
The profitability of the single gambling table is in the forefront of the industry, and the direct VIP and high-end midfield business has great development potential. The VIP business has a solid foundation. The net income of the single gaming table in 2020 is 1056.28 Hong Kong dollars per table, ranking in the forefront of the industry. At the same time, as of 2021H1, the company ranks first in the market share of VIP business, accounting for 28.2%. We believe that the VIP business accumulates deeply, accumulates a lot of high-quality customer resources, and has strong passenger reception capacity. In the future, although the intermediary VIP business will decline to a certain extent due to intermediary control, customers are expected to move to direct VIP or high-end midfield with higher profit margin to further enhance the company's profitability.
The market share of midfield business is leading in the industry, actively opening up the international market.
Before the epidemic, the company's midfield business revenue continued to grow, reaching HK $29.26 billion in 2019, an increase of 6% over the same period last year, accounting for 49.3% of revenue. At the same time, the company's midfield business has a leading market share in the industry, second only to Sands China, with 2021H1 accounting for 18.7%. The company's newly expanded phases 3 and 4 of Cotai will focus on non-gaming businesses, focusing on conferences, incentive tours, exhibitions and events (MICE), entertainment and facilities suitable for family travelers, which are expected to increase the number of passengers in the midfield. At the same time, the company is actively expanding overseas markets and is expected to bring its world-class integrated resort brand to Japan.
First in the reserve land industry, fully benefit from the expansion of the Hengqin project to promote the development of non-gaming business development companies in Hengqin invested 10 billion yuan in Hengqin to develop a world-class resort, which covers an area of 2.7square kilometers and has a coastline of 2.5km along the coast. the low-density resort composed of low-rise buildings will complement the company's high-density projects in Macau, with the completion of the Macau light rail extension Hengqin line project in 2024. The expansion of the company's project in Hengqin is expected to greatly promote the development of the company's non-gambling projects. At the same time, Macao is short of land resources, and the company's reserve land area ranks first in the industry, and its investment in non-gambling projects and planning are expected to give it a competitive advantage in the follow-up gambling bidding.
Profit forecast and investment advice: we believe that the company, as the leader of Macau gaming industry, VIP and midfield business market share is in the forefront of the industry, and may be the first to benefit from the rebound of demand-side visitors after the improvement of the epidemic. At the same time, the company's reserve land industry first, in recent years to vigorously expand non-gaming projects, promote the diversified development of Macao industry, in the follow-up gaming license auction may have a strong competitive advantage We expect the company's total net income for 2021-2023 to be HK $40.637 billion, adjusted EBITDA of HK $237 million, EV/EBITDA of 17 times for 2023, corresponding to the target price of HK $52.71.
Risk hint: epidemic repeated risk, competition aggravating risk, macroeconomic risk, policy risk, new business expansion is less than expected risk.