Review of results for the second quarter of 2024: Australian Pomo Gaming revenue increased 0.1% month-on-month to HK$6.89 billion (same as below) (recovering to 69.9% in the same period in 2019). VIP gaming revenue, midfield gaming revenue, and slot machine gaming revenue increased by -17.5%, 1.1%, and 2.6%, respectively (recovering to 15.1%, 95.3%, and 136.3% in the same period in 2019); non-gaming revenue decreased 1.8% month-on-month (accounting for 6.5%). EBITDA increased 0.8% month-on-month to 0.87 billion yuan (recovering to 86.8% in the same period in 2019). Including the cost of satellite casinos, the EBITDA was $0.93 billion (back to 92.4% in the same period in 2019). Net profit loss was $89 million. The Group's total daily operating expenses decreased by 2.6% month-on-month to 19.9 million yuan. The overall market share in the second quarter increased 0.2 percentage points month-on-month to 12.6%. Cash on the Group's accounts was approximately $3.43 billion, and net liabilities were approximately $23.53 billion.

Performance of “Grand Lisboa” and other casinos: Gaming revenue from “Grand Lisboa” and other proprietary and satellite casinos increased by -5.0%, 0.1%, and -0.1%% to 1.78 billion yuan, 1.26 billion yuan, and 2.64 billion yuan, respectively (recovering to 53.5%, 81.0% and 51.6% in the same period in 2019, respectively); their EBITDA was 0.48 billion yuan, 0.32 billion yuan, and 0.02 billion yuan, respectively (Recovered to 80.8%, 94.1%, and 12.4%, respectively, in the same period in 2019). EBITDA for satellite casinos has begun to turn losses into profits. “Grand Lisboa” has also reopened the VIP room on the 36th floor and will increase catering retail and hotel facilities (the project should not affect the normal operation of the project).

Performance of the “Grand Lisboa”: “Grand Lisboa” recorded revenue of 1.54 billion yuan (12.4 million yuan for gaming — 68% of “Grand Lisboa” and 324 million yuan for non-gaming), an increase of 9.3% over the previous year. EBITDA increased 17.2% month-on-month to 104 million yuan. The project's daily operating expenses increased 5.8% month-on-month to 7.0 million yuan. The market share of “Haute Lisboa” is about 2.2%. The multi-purpose venue is under construction and is expected to be launched in the first half of next year.

Other key points: According to information, the Group's market share further increased to 13.5% in July-August; while the market share of “Shanghai Lisboa” also increased to 2.5%. The number of people in the “Upper Lisboa” increased 22% month-on-month, mainly driven by midfielders. We haven't seen any impact on the money exchange incident yet. The Group has employed approximately 126 VIP customer service agents and 69 promotion personnel.

The target price is HK$2.90, 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$2.90, which is based on Grand Lisboa Casino, other self-promoted casinos and satellite casinos, and other businesses 9.7 times the 2024 EBITDA valuation.

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.