Date of Report
Thursday, 03 October 2024
Broker Name
UOB Kay Hian
Market Share Gains Through Strategic Initiatives
Galaxy Entertainment Group has been making significant strides in expanding its market share, driven by strategic initiatives such as the expansion of its sales host team and the introduction of entertainment events. These efforts have enhanced the company’s competitive position in the market, allowing it to capture a larger share of the entertainment and gaming sector.
Cost Control Driving Margin Expansion
Galaxy continues to demonstrate strong discipline in cost control, which has contributed to ongoing margin expansion. The company’s focus on maintaining a lean operational structure while investing in key growth areas has enabled it to improve profitability, positioning it for sustained success in a highly competitive industry.
Potential for Increased Shareholder Returns
Galaxy is well-positioned to raise its dividend payout ratio, given its strong balance sheet and prudent capital expenditure (capex). The company’s solid financial foundation, combined with efficient management of its resources, provides opportunities for enhanced shareholder returns in the near future.
Valuation and Target Price
UOB Kay Hian maintains a “BUY” rating on Galaxy with a target price of HK$48.00. This target is based on a 14.5x 2024F implied EV/EBITDA ratio, with the target price implying a 21.2x 2024F price-to-earnings (PE) ratio and 17.1x 2025F PE ratio. The valuation reflects the company’s growth potential and favorable market conditions.
Catalysts for Share Price Growth
A key catalyst for Galaxy’s share price growth is the performance during the National Day holidays. Strong results during this period could further boost the company’s financial performance and investor confidence, leading to potential share price appreciation.
Timeline for Growth
The upcoming third quarter of 2024 is expected to be a key period for Galaxy, with further market share gains anticipated as a result of its strategic initiatives. The company’s focus on driving performance through cost control and market expansion will be central to its growth during this time.
Investment Outlook
Galaxy’s strong market position, disciplined cost management, and potential for increased shareholder returns make it a compelling investment opportunity. The company’s ability to continue expanding its market share while maintaining profitability highlights its long-term growth potential in the entertainment and gaming industry.
