Morgan Stanley lowers Galaxy Entertainment EBITDA forecast

Galaxy Entertainment’s 2024 EBITDA forecast has been revised down by 14.5 per cent.

Macau.- Morgan Stanley Asia has decreased its earnings before interest, taxation, depreciation, and amortisation (EBITDA) forecast for Galaxy Entertainment Group (GEG) for the year to HK$11.81bn (US$1.51bn). That’s a drop of 14.5 per cent from the previous forecast of HK$13.82bn. 

According to Praveen Choudhary and Gareth Leung, the new prediction is based on lower mass-market share and higher costs. Net revenue is expected to reach HK$42.26bn, a decrease of 6.8 per cent from the previous estimate.

Morgan Stanley has also lowered its 2025 forecasts for the casino operator to HK$14.41bn in EBITDA and HK$48.21bn in net revenue, down 3.6 per cent and 1.4 per cent respectively.  

The EBITDA forecasts are below the consensus for 2024 and 2025, but analysts say the consensus assumed share gains after the opening of Phase III of the Galaxy Macau casino resort in the second half of 2023 that did not materialise. 

Morgan Stanley predicts that Galaxy Entertainment’s mass-market share will have declined to 17.2 per cent in the first quarter of 2024. It forecast first-quarter corporate EBITDA of HK$2.9bn, up 2 per cent sequentially but weaker than the industry’s expected 5-per cent quarter-on-quarter growth due to mass share loss and operating deleverage.

In February, Galaxy Entertainment released its full-year 2023 financial results. Net revenue of HK$35.7bn (US$4.56m), up 211 per cent year-on-year. Galaxy Macau’s net revenue was up 274 per cent year-on-year at HK$27.7bn, with adjusted EBITDA of HK$9.1bn. StarWorld Macau’s net revenue was HK$4.6bn, up 343 per cent year-on-year. Adjusted EBITDA was HK$1.3bn.