The performance is in line with expectations, and we are optimistic that adjusted EBITDA profit margins will return to 2019 levels. On the revenue side, 4Q23 achieved net revenue of HK$6.39 billion (basically in line with our expectations of HK$6.47 billion), recovering to 75.6% in the same period in 2019. Net revenue from gaming/non-gaming was HK$59.5/HK$4.4 billion, respectively, recovering to 71.0%/245.2% in the same period in 2019. The significant recovery in non-gaming business was mainly due to the large number of guest rooms and large retail space in new properties.
On the profit side, 4Q23 Company's adjusted property EBITDA was HK$750 million (basically in line with our expectations of HK$770 million). Recovered to 59.1% of 4Q19. If only self-promotion of properties is considered, the adjusted EBITDA for 4Q23 has returned to 81% of the same period in 2019.
4Q23 achieved total gross revenue of HK$6.30 billion, recovering to 62.5% of 4Q19: VIP/midfielder (including slot machines) revenue was HK$51/5.79 billion, respectively, recovering to 15.3%/86.0% in the same period in 2019 (lower than 24.0pct/18.0pct for the industry, respectively) in the same period in 2019 (under the GPA caliber). 4Q23 The company's overall market share was 12.0%, down 2.4 pct from 14.4% in the same period in 2019, mainly due to:
1) The company closed 5 satellite casinos in 2023, and the market share of satellite casinos decreased by 2.6 pct; 2) Affected by strict regulations, the market share of the company's VIP business decreased by 1.9 pct. Meanwhile, the 4Q23 GLP market share and midfield market share (excluding GLP) market share increased by 1.8 pct/1.3 pct, respectively, compared with the same period in 2019.
At a market share close to 2%, GLP adjusted property EBITDA from negative to positive.
Adjust the company's organizational structure to take full advantage of the synergy between Grand Lisboa and New Lisboa. The company has restructured its organizational structure and set up a platform to control the daily operation and service quality of all properties to give full play to the synergy between Shanghai and New Lisboa. The company currently selects about 100 customers every day, from Grand Lisboa, which has a better location and more traffic, to Lisboa, which has a slightly lower location but more adequate number of guest rooms and non-gaming facilities, so as to fully tap the customer's consumption potential and increase the occupancy rate of guest rooms in Lisboa. At present, the company's move has begun to bear fruit: 1) In January-January 2024, GLP's midfield betting amount increased 25% month-on-month, and the number of customers visiting the gaming area increased 12% month-on-month. At the same time, Grand Lisboa's midfield earnings did not decline; 2) Due to the extension of the customer's per capita bet amount and length of stay, GLP's midfield win rate increased from about 17% in 4Q23 to about 18% in 1-2 January '24.
Profit forecast and investment rating: We maintain the company's 2023-2025 net revenue forecast of HK$217.1/260.2/HK$28.08 billion; maintain the adjusted property EBITDA forecast of HK$19.5/3.48/HK$4.91 billion; the current stock price corresponds to 2023/2024/2025 EV/EBITDA of 21.2/11.9/8.4 times, respectively. Our target price is HK$3.6, maintaining a “buy” rating.
Risk warning: Macau's tourism recovery fell short of expectations, China's macroeconomic growth fell short of expectations, overseas gaming markets were diverted, and VIP recovery fell short of expectations.