CICC: Maintains "Outperform" rating on GALAXY ENT (00027) with a target price of HKD 38.00.

CICC released a research report stating that it maintains its EBITDA forecasts for GALAXY ENT (00027) for 2026 and 2027. The company's current stock price corresponds to a 9x EV/EBITDA for 2026 (with financial assets treated as cash). CICC maintains an industry outperform rating and a target price of HKD 38.00, corresponding to a 10x EV/EBITDA for 2026 (with financial assets treated as cash), which indicates an 11% upside compared to the current stock price. CICC's main points are as follows: 2Q26 performance meets expectations GALAXY ENT announced its 2Q26 performance: revenue was HKD 11.835 billion, a year-on-year decrease of 2% and a quarter-on-quarter decrease of 5%, recovering to 90% of the level in 2Q19; adjusted EBITDA was HKD 3.380 billion, both year-on-year and quarter-on-quarter down 5%, recovering to 78% of the 2Q19 level, basically in line with CICC's expected HKD 3.367 billion. CICC believes that GALAXY ENT's performance is mainly driven by an increase in market share from 19.9% in 1Q26 to 20.3% in 2Q26, along with cost control. Development trends After the conclusion of the 2026 World Cup schedule, the high-end business segment (VIP business and high-end mid-market) saw a rebound in late July and August of 2026; the overall rebate levels in the industry remain competitive but are stabilizing; CICC believes the company's shareholder returns will continue under a dividend-oriented strategy: it has announced an interim dividend of HKD 0.90 per share, corresponding to a payout ratio of about 75%. However, the company has not committed to fixing the per-share dividend amount or payout ratio; due to geopolitical disturbances and conflicts, Macau and Hong Kong are expected to benefit as tourist destinations; the comprehensive renovation of the gaming area and hotel rooms at the StarWorld Hotel is expected to be completed by 1Q27. Risk warnings: New property launches are lower than expected; construction progress is below expectations; intensified competition may lead to loss of market share.