First-quarter results were in line with expectations: 21Q1 achieved gross gaming revenue of HK $2.652 billion (+ 9.0% QoQ,-32.7% YoY), of which GGR for VIP business was HK $485 million (+ 3.4% QoQ,-59.4% YoY), midfield business GGR was HK $2.051 billion (+ 9.2% QoQ,-21.3% YoY). Adjusted EBITDA to-319 million Hong Kong dollars (+ 1.2% QoQ,-59.5%). In terms of property, thanks to the company's reshaping of the new Lisboa, business income outside VIPs doubled month-on-month in March, and the proportion of hotel guests participating in gambling games increased from 30% to 50%.
GGR recovered faster than visitors: in the first three days of May Day, the average number of visitors per day in New Portugal was 12500, returning to 21 per cent in the same period in 19 years, 80 per cent higher than before Golden week, but GGR recovered to 40 per cent in the same period in 19 years, with VIP and midfield GGR recovering 25 per cent and 47 per cent respectively. The recovery rate of GGR is faster than the number of visitors, mainly because: group tours have not yet been resumed, and tourists to Macao are basically individual tourists with higher gambling expenses; visitors are more willing to participate in gambling games than before the epidemic; and because travel to Macao is not as convenient as it was before the epidemic, tourists tend to stay in Macao for longer (Grand Lisboa Macau occupancy rate during May Day Golden week was over 99%).
Lisboa Upper will open in stages at the end of 21Q2: at present, the Macau Land, works and Transport Bureau and Macau Tourism Office have basically completed the inspection of Lisboa Upper, and the company is waiting for permission to start the project. At the beginning of the opening of Lisboa, the company plans to open 300 rooms, 6-8 restaurants and some retail areas on Hotel Lisboa. After improving the level of supply chain management and improving service standards, the company will open Lafayette Hotel and Versace Hotel successively. The gaming agency hall will open a few months after the opening of the Portuguese capital. It is planned to have 304 midfield gaming tables and 1034 slot machines in Upper Lisboa. At the beginning of the opening of Lisboa, the daily operating cost is between HK $6 billion and HK $7 million, which will rise to HK $90 billion to HK $10 million after a complete climb.
Earnings Forecast and Investment rating: the company's 21-23 EBITDA is expected to be HK $1.13 billion, HK $6.34 billion and HK $7.47 billion, with a 22-year EV/EBITDA 13x (industry historical hub), with a corresponding fair value of HK $12.0 per share, upgraded to a highly recommended rating.
Risk tips: the risk of postponing the Lisboa project; the risk of tightening foreign exchange controls; and the risk that the COVID-19 epidemic lasts longer than expected.