Fourth quarter of 2023 results review: Australian Pomo Gaming revenue increased 9.0% month-on-month to HK$6.74 billion (same as below) (recovering to 65.7% in the same period in 2019). VIP gaming revenue, midfield gaming revenue, and slot machine gaming revenue increased by 52.2%, 8.2%, and -2.0%, respectively (recovering to 15.2%, 84.9%, and 99.2% in the same period in 2019); non-gaming revenue decreased 2.7% month-on-month (accounting for 6.9%). EBITDA increased 23.8% month-on-month to 70 million yuan (recovering to 59.1% in the same period in 2019), and the performance of “Grand Lisboa” and other self-operated businesses was in line with expectations. Including the cost of satellite casinos, the EBITDA was $830 million (back to 66.8% in the same period in 2019). Net profit losses continued to narrow slightly to -340 million yuan. The Group's total daily operating expenses increased 2.0% month-on-month to 19.3 million yuan. Overall market share remained stable month-on-month (12.0%) in the fourth quarter. Cash on the Group's accounts was approximately $4.55 billion, and net liabilities were approximately $236.0 million.
Performance of “Grand Lisboa” and other casinos: Gaming revenue from “Grand Lisboa”, other proprietary and satellite casinos increased by +16.4%, -1.0%, and +10.8% month-on-month to $17.1 billion, $1.17 billion, and $2.55 billion (recovering to 52.5%, 70.9%, and 49.3% in the same period in 2019, respectively); their EBITDA was 480 million yuan, 320 million yuan, and -50 million yuan, respectively (back to 74.4%, 91.5%, and 0% in the same period in 2019). The Group currently has 9 satellite entertainment companies. After deducting the impact of the 5 satellite entertainment companies that have been discontinued, the EBITDA of satellite casinos is 082 million yuan.
The performance of “Grand Lisboa”: “Lisboa” recorded revenue of 1.16 billion yuan (782 million yuan for gaming — 51% of “Grand Lisboa” and 282 million yuan for non-gaming), an increase of 6.5% over the previous year.
EBITDA turned a loss into a profit of 2 million yuan. The project's daily operating expenses increased 5.6% month-on-month to 6.5 million yuan. The market share of “Haute Lisboa” is about 1.8%. With the launch of more products, the number of promoters and the improvement of customer quality, the long-term market share is expected to increase to 4-6%; the future growth potential is huge.
Other key points: It is understood that in January-January, the Group's midfield business should have increased 35% over the same period in '19.
The Group will also install RFID on chips to improve game speed, efficiency and security, and at the same time be able to better analyze customer data to identify high-quality customers. The Group's management system has been reformed, and all departments will be managed by a central department; the goal is to focus on growth and profit. In the early stages of the reform, it has been seen that “Grand Lisboa” and “Grand Lisboa” can have a synergistic effect.
The target price is HK$3.28, maintaining the buying rating: As Macau recovers, we believe the Group will also benefit; at the same time, climbing the “Lisboa” slope will enhance the Group's long-term growth and competitive advantage; we continue to be optimistic about the future development of the Australian Expo. Maintain a buy rating. The target price is HK$3.28, which is based on 10.4 times the 2024 EBITDA estimate for Grand Lisboa, other self-promoted casinos and satellite casinos, and other businesses.
Important risks: We believe the following are some of the more important risks: 1) economic growth is worse than expected, 2) policy risks, 3) the performance of “Lisboa” falls short of expectations, and 4) market competition.