Galaxy Entertainment reported 3Q24 net revenue of HK$10.7bn (-2% QoQ, +11% YoY), and normalized adjusted EBITDA of HK$3.1bn (-3% QoQ, +7% YoY), in line with our expectation. We maintain EPS forecast of HK$2.15 in 2024E, HK$2.46 in 2025E, and HK$2.88 in 2026E. We maintain target price of HK$55, and with 51% upside potential, we maintain a Buy rating.

3Q24 results. During 3Q24, the company's total gross revenue, mass revenue, slot revenue, and VIP revenue recovered to 74%, 122%, 110%, and 18% of 3Q19 levels, respectively. EBITDA recovered to 79% of 3Q19 level. Hotel occupancy rates at Galaxy Macau and StarWorld Hotel were 98% and 100%, respectively.

New hotel and project. The Galaxy Macau Capella, featuring a 17-storey hotel with c.100 sky villas and suites, is scheduled to open in mid-2025. The Galaxy Macau Phase four project is expected to be completed by end-2027.

Strong balance sheet. As of September 30, the company's net cash position was HK$27.4bn.

Maintain Buy. We like the resilience of the gaming business, and Galaxy's long-term growth potential. We maintain target price of HK$55, and with 51% upside potential, we maintain a Buy rating.

Risks: Lower-than-expected revenue recovery; competition leads to lower margin.