Morgan Stanley Cuts Galaxy Entertainment’s Forecast, Citing Market Share Loss

Citing a decline in market share, Morgan Stanley recently lowered Galaxy Entertainment’s projected earnings.

Analysts remarked that although there were expectations for market improvements after the Phase 3 launch in 2H23, these expectations were not met.

Morgan Stanley as a result cut its target price for the shares by 17% to HK$38.0, implying a 14% decline in 2024 EBITDA. Revisions to market share projections indicate that EBITDA will decline by 7-8 percent in 2025 and 2026.

Phase 3 was introduced by Galaxy Entertainment Group in December of last year. Its goal is to transform Macau’s gaming scene by emphasizing non-gaming elements, especially the 40,000 square meter Galaxy International Convention Center (GICC).

Due to mass share loss and operational difficulties, Morgan Stanley projects that Galaxy’s 1Q24 corporate EBITDA will decrease by 2% quarter-to-quarter to HK$2.9 billion ($370 million), or 72% of 1Q19. This will lag behind the industry’s 5% quarter-to-quarter, or 81% of 1Q19.

But things might get better if Galaxy starts to see real gains in market share starting in 2H24. Morgan Stanley perceives Galaxy’s strong operating capabilities and favorable net cash position as possible benefits amidst China’s volatile macroeconomic environment.

Original Story by: Asian Gaming Brief