Galaxy Seen Posting 5% Q1 EBITDA Growth on Premium Mass Strength

Jefferies expects Galaxy Entertainment (00027.HK) to report a 5% rise in first-quarter adjusted EBITDA to 3.5 billion ahead of the company's official announcement today.

"The market continues to favor Wynn Macau and Galaxy Ent given their industry-leading execution in the premium mass segment," Jefferies said in a May 12 report.

The forecast projects Galaxy's quarterly gross gaming revenue to grow 18%, with revenue climbing 17% to 16.7 billion, implying an EBITDA margin of 27%. For the broader market, Jefferies estimates Macau’s full-month May GGR to range between MOP21.7 billion and MOP23.3 billion, implying year-on-year growth of 2% to 10%.

While both Galaxy and Wynn trade at valuations above the industry average, Jefferies believes their growth visibility and management capability are more important than relative valuation. The upcoming results are a key indicator of momentum in Macau's high-end gaming recovery.

The positive outlook for Galaxy comes as competitors show mixed results. Wynn Macau’s (01128.HK) first-quarter revenue met Jefferies' expectations but fell 4% short of the market consensus. Meanwhile, SJM Holdings (00880.HK) delivered first-quarter adjusted EBITDA that beat market expectations by 5%, with management prioritizing market share gains in the second quarter.

The focus on the premium segment is intensifying across Macau. Wynn Macau is planning a new US$950 million luxury hotel tower, "The Enclave at Wynn Palace," to better compete for high-end business, according to Seaport Research Partners.

A strong report from Galaxy could reinforce investor confidence in the premium mass strategy that has led the city's recovery. Investors will watch for management's commentary on the summer holiday outlook and the competitive landscape during the earnings call later today.

This article is for informational purposes only and does not constitute investment advice.