Core views

The company's 24H1 revenue was $3.55 billion, +22.7% YoY. 24H1 realized profit of 0.541 billion dollars, +209.1% YoY. Achieved adjusted EBITDA of $1.17 billion, +24.7% YoY. Part of the company's business was affected by the Londoner Phase II project, but the overall recovery was strong. Core property businesses grew steadily, with 24H1 Casino revenue of 2.698 billion US dollars, +24.8% year over year, recovering to 75.2% in the same period in 2019, with a recovery of -2.9 pct compared to 23H2. Total gaming wins in 24Q2 recovered to 81.0% in the same period in 2019, with a recovery of +7.8pct. Further upgrades to be renovated and upgraded will gradually be released, and it is hoped that the appeal will continue to increase with core property collaboration and comprehensive leisure and vacation advantages.

occurrences

The company released 2024 interim results, with 24H1 revenue of 3.55 billion dollars, +22.7% year-on-year. 24H1 realized profit of 0.541 billion dollars, +209.1% YoY. Achieved adjusted EBITDA of $1.17 billion, +24.7% YoY.

Brief review

Part of its business was affected by the Londoner Phase II project. The overall recovery strength company will continue to carry out the Londoner Phase II project, including refurbishing guest rooms in the Sheraton and Conrad hotel buildings, upgrading the gaming area, and adding new attractions, dining, retail and entertainment options. The total cost of these projects is estimated to be 1.2 billion US dollars and is expected to be roughly completed in early 2025. The progress of the project is expected to have a certain impact on related business, and some business areas will be temporarily shut down; the 24Q2 company's revenue is 1.75 billion dollars, +8.0% year over year, recovering to 81.8% in the same period in 2019, with a recovery of +4.5 pct month-on-month; 24Q2 net profit of 0.246 billion US dollars, recovering to 48.1% of 2019, month-on-month- 5.2 pct; adjusted EBITDA for 24Q2 was $0.561 billion, +3.7% year over year, recovering to 73.3% in 2019, +2.2 pct month-on-month. The adjusted EBITDA rate for 24Q2 was 32.1%, -1.3 pct year on year, -1.8 pct; total 24H1 capital expenditure was 0.218 billion US dollars, +175.9% year over year, and 23H2 +43.4% month on month, of which Londoners reached 0.123 billion US dollars. The company's overall revenue and performance recovery in 24Q2 is still strong.

The core property businesses are growing steadily, and we expect incremental flexibility to release 24Q2's total gaming business revenue of 1.71 billion dollars, recovering to about 81.0% in the same period in 2019, with a recovery of +7.8pct month-on-month; 24H1 casino revenue of 2.698 billion US dollars, +24.8% year-on-year, recovering to 75.2% in the same period in 2019, and a recovery of -2.9 pcts month-on-month compared to 23H2. Room revenue was $0.393 billion, +16.3% YoY. Shopping center revenue was $0.231 billion, +3.1% YoY. Food and beverage revenue was $0.135 billion, +29.8% YoY. Conference, ferry and retail revenue was 94 million US dollars, +38.2% year over year; looking at core properties, Venetian 24Q2 Casino's revenue recovered to about 79.7% in the same period in 2019, with a recovery rate of -6.6 pcts month-on-month, and the recovery of midfield entry amounts declined month-on-month. The total revenue of Venetians recovered to 80.3% of the same period in 2019, and the recovery rate was -5.6 pcts month-on-month. Londoners 24Q2 casino revenue recovered to about 88.8% in the same period in 2019, and the recovery rate was -5.3 pcts month-on-month. Parisian 24Q2 casino revenue recovered to 60.4% in the same period in 2019, with a recovery of +15.7pct compared to the previous month. Paragon 24Q2 casino revenue recovered to 109.9% in the same period in 2019, with a recovery rate of +69.4pct. Looking at the overall gaming business, VIP business revenue recovered to 32.0% in the same period in 2019, and the recovery rate was 24q1+12.7pct month-on-month. Midfield business revenue recovered to 98.1% in the same period in 2019, and the recovery rate was +5.2 pcts month-on-month. Total gaming wins recovered to 81.0% in the same period in 2019, and the recovery rate was +7.8pct month-on-month. The company's gaming business as a whole has maintained a steady trend of restoration and improvement. It is hoped that it will continue to increase its appeal through core property collaboration and comprehensive leisure and vacation advantages.

Investment advice: Net profit due to mother is expected to be achieved from 2024 to 2026:1.074 billion US dollars, 1.642 billion US dollars, and 1.845 billion US dollars. The current stock price corresponding PE is 14X, 9X, and 8X, respectively, and the corresponding EV/EBITDA is 9X, 5X, and 5X, respectively, maintaining an “increase” rating.

Risk analysis

1. If the recovery of passenger traffic from the mainland to Macau falls short of expectations this year, there may be a situation where the overall restoration of passenger flow falls short of expectations and the utilization rate of gaming tables is not high, which affects revenue side restoration, and the share of some rigid costs increases, putting greater pressure on performance; 2. If the Macau gaming VIP business shrinks significantly in the future, and it is difficult to provide sufficient passenger flow to make up for it, it will be more difficult to recover gross gaming revenue than before the pandemic. The new gaming law stipulates an upper limit on the number of gaming tables., then it may bring in the revenue side stress;

3. Each license promises an investment amount for the next 10 years, mainly focusing on non-gaming and foreign customer drainage. If it is difficult to obtain a good return on investment, it may cause pressure on profitability;

4. Performance disturbances caused by the renovation of Londoners and other properties, and there is still uncertainty about the results verification after the renovation is completed; 5. If consumers believe that the gaming industry has strong optional consumption attributes and limited carrying capacity, it may affect consumption choices to a certain extent.