The company disclosed its second-quarter results: 21Q2's revenue was HK $2.74 billion, an increase of 10.7% over the previous month, of which gaming net income was 2.66 billion yuan. 21Q2 lost HK $191 million and HK $819 million respectively on adjusted EBITDA and homing net profit. At the gaming business level, 21Q2's gaming VIP business GGR recorded HK $370 million, down 23.7% from the previous month to 10.5% of the same period in 2019, while the gaming midfield business recovered even better, with 21Q2 achieving HK $2.33 billion GGR and returning to nearly 40% of 19Q2.
For the Shanghai Portuguese property with the highest attention in the market, we summarize it from many aspects, such as gambling table, guest room, operating expenses and so on. (1) opening: the capital of Shanghai Portugal opened on July 30, but it is only partially opened because of the large gap between tourists and gambling data before the epidemic. (2) allocation of gambling tables:
At present, there are 150 midfield gaming tables (granted by the government) and 661 slot machines. In the future, the company plans to deploy 118 gaming tables from other properties to Lisboa, and the number of slot machines will gradually increase to 1200 granted by the government. (3) Room supply: at present, the tourists entering Upper Lisboa are mainly locals, about 10,000 people per day, and the company has opened 504 rooms. The company will increase the number of rooms available for the rest of the year according to market demand. (4) operating expenses: at present, the company's daily operating expenses are about 4.8 million Hong Kong dollars / day, and the daily operating expenses of Lisboa are about 9 million Hong Kong dollars after the full opening. (5) the break-even point of EBTIDA: when the property GGR reaches about 30% of the full normal operation, the break-even of EBITDA can be achieved. (6) Business strategy: the current focus is on reactivating customers. For example, in the past, many new Lisboa customers have not entered the company's casinos for a long time, and the company plans to introduce these potential lost customers to Lisboa.
Profit forecast and investment suggestions: the epidemic situation will still have a great impact on the operation of Macao's gaming industry in 2021, but the gaming industry has a monopoly attribute and the competition pattern is stable. We value the company based on the company's 2022 EBITDA forecast of HK $4.74 billion and give the company 13x EV/EBITDA (above the historical average, below the historical average + 1std) to reflect the company's expectations of thickening performance when it opens in Portugal and Beijing. It is calculated that the reasonable value of the company is HK $8.64 per share and the buy rating is maintained.
Risk tips: the spread of the epidemic in the mainland; the tightening of foreign exchange controls; the risk of renewal of gambling licences.