Galaxy Entertainment Group Ltd - Strong quarter, stronger runway
- 4Q25 net revenue up 22% y/y to HKD13.8bn, along with its 27% increase in GGR to HKD14bn to outpace the broader market's 15% growth, above expectations. Adjusted EBITDA up 33% to HKD4.3bn on the back of tight cost control
- Full-year 2025 net revenue rose by 13% to HKD49.2bn and Adjusted EBITDA up 19% to HKD14.5bn (or up 5% to HKD13bn on normalized basis). Net cash at HKD35bn, with rising payout ratio from 50% in 2024 to 61% in 2025
- The latest Chinese New Year (commenced on Feb 17th) ramped up strongly from day 3 to day 4 onwards. Its Luxury Phase 4 expansion should also ride on the premium‑mass segment, with tech‑enabled cost‑disciplined strategies to bring better dividends ahead. Trading at 10x prospective EV/EBITDA, with c.4% yield, we maintain BUY
4Q25 - a strong finish to the year. Galaxy Entertainment Group (GEG) concluded 2025 with a robust 4Q25, outperforming the overall Macao market. Net revenue grew 22% y/y and 14% q/q to HKD13.8bn. This momentum was largely driven by a 27% y/y increase in GGR, significantly outpacing the broader market's 15% growth. The standout performance was in the non-VIP (Mass) segment, where GGR reached 125% of 2019 levels for the full year, highlighting the sustained strength of the premium mass strategy. Profitability surged accordingly, with Adjusted EBITDA growing 33% y/y and 29% q/q to HKD4.3bn, aided by favorable luck and strategic focus. This was achieved while maintaining rigorous cost discipline, as evidenced by a daily opex of just USD3.7mn for the company.
Sound full-year results. 2025 net revenue rose 13% y/y to HK$49.2bn and Adjusted EBITDA up 19% to HK$14.5bn, aided by favourable gaming luck that added c.HK$1.5bn. On a normalized basis, Adjusted EBITDA was HK$13bn, representing 5% growth, while attributable profit rose 22% to HK$10.7bn. The company’s total gross gaming revenue (GGR) advanced 19% to HK$49.1bn, comprising HK$36.5bn mass-market (+10%), HK$9.5bn VIP (+79%) and HK$3.1bn electronic gaming (+14%). Specifically, its mass GGR recovered to 125% of 2019 pre-COVID levels. Its balance sheet remained strong and liquid, with net cash of HK$35bn after deducting HK$1.3bn of debt, underpinning both an active development pipeline and resilience against external shocks. Chairman Francis Lui emphasized alignment with all shareholders and a commitment to growing payouts, having raised the payout ratio from ~30% a few years ago to 65% for 2H 2025 (61% for the full year), subject to market stability and maintaining financial capacity for growth and resilience.
Core properties outperformed. Galaxy Macau remained the primary earnings driver, posting 2025 net revenue of HKD41bn (+19%) and Adjusted EBITDA of HKD13.4bn (+24%), with normalized Adjusted EBITDA up 8% to HKD11.9bn and 4Q25 hotel occupancy across nine hotels at 99%. StarWorld Macau, which is undergoing major upgrades, recorded net revenue of HKD5bn (–7%) and Adjusted EBITDA of HKD1.4bn (–13%), though hotel occupancy reached 100% for the full year. Broadway Macau generated net revenue of HKD205mn (–7%) and Adjusted EBITDA of HKD11mn (–54%), while City Clubs’ net revenue declined to HKD109mn (–48%) and Adjusted EBITDA turned to a loss of HKD7mn given the cessation of Waldo Casino operations on 31 Oct 2025. The Construction Materials Division delivered solid results, with Adjusted EBITDA of HKD877mn (+2%) supported by improved performance in Mainland China despite softer demand and project delays in Hong Kong and Macau.
Entertainment-led diversification. GEG played a leading role in advancing Macau’s transformation into a “City of Performing Arts” and “City of Sports”, with Galaxy Arena and Galaxy International Convention Center (GICC) driving significant non-gaming traffic since 2025. The company hosted around 350 concerts, entertainment shows, sporting events and major conventions last year, including Andrea Bocelli’s concert, the ITTF World Cup, performances by G‑Dragon, Jacky Cheung and Eason Chan, the National Games, the iQIYI Scream Carnival and the “Greater Bay Area Film and Music Gala – Bay Area Rising Moon”. These events attracted large audiences from both Mainland China and overseas, enhanced brand equity and generated incremental resort-wide revenues. Looking ahead to 2026, GEG plans to deepen partnerships with leading global entertainment companies, expand its collaboration with UFC to bring UFC Fight Nights to Macau, and leverage a renewed three‑year cooperation agreement with Damai Entertainment and Macau Pass to strengthen ticketing and customer engagement.
Capella, resort upgrades and Phase 4. GEG continues to enhance its flagship properties and expand its ultra‑luxury and non‑gaming offerings. Capella at Galaxy Macau soft-launched in May 2025 and officially opened on 10 Feb 2026, introducing 95 ultra-luxury signature suites and penthouses that elevate service levels and enable more effective capture of the super-premium mass segment. At StarWorld Macau, comprehensive renovations are underway across gaming floors, food and beverage areas and hotel rooms, with all rooms expected to be completed by 1Q27. Phase 4 on Cotai, currently being fitted out, will span c.600,000sm and feature c.1,350 enlarged premium rooms & suites, a circa 5,000-seat theatre, extensive F&B, retail, non-gaming amenities, a water resort deck and a casino, with completion targeted for 2027.
Phased development & integrated vision. Chairman Francis Lui detailed GEG's master-planned, phased development strategy for Galaxy Macau. This approach allows the company to adapt to rapidly evolving customer preferences by building the latest aspirational products at the right time, avoiding costly retrofits. He explained that while Phases 1 & 2 (traditional resort with hotels, F&B, retail, gaming) were quick to pay back, Phase 3 (convention center, arena) required time to build the brand but is now fully operational. The impending Phase 4 currently under development, which will add ~1,350 hotel rooms and a theater, is designed as a high-end, asset-light extension akin to the profitable Phases 1 & 2. Crucially, all phases are designed to function as a single, seamless integrated resort, with the non-gaming "hardware" of Phase 3 now serving to expand Macao's customer catchment and enhance the entire property's appeal.
Operational focus: quality, technology & cost discipline. GEG consistently competes on quality of product and service. This strategy is enabled via significant technology investments, including (i) smart tables & data analytics: providing deep customer insights that allow for targeted marketing, efficient reinvestment, and a 2ppt lift in mass hold percentage; (ii) AI & automation: Used for labour forecasting and scheduling, enabling the company to operate Phase 3 assets with roughly the same manpower as in 2019; (iii) daily operating costs were contained to US$3.7mn for the group in 4Q25. On the whole, a customer-centric evolution posted trends that include a demand for holistic, high-quality experiences (gaming, dining, shopping, entertainment) within a private, secure, and seamless environment—a principle guiding the design of GEG’s Phase 4.
Dividend policy and strategic plans: Lui stated the board will continue to review dividends with the goal of providing the best return, balancing growth, opportunity, and resilience. There is no formal payout policy, but a track record of increases. Besides, its traditional, asset-light model (hotels, F&B, retail, casino) is expected to be highly profitable, similar to the proven returns of Phases 1 & 2 and the recent ramp-up of The Raffles and Andaz hotels. The latest Chinese New Year in 2026 started soft but ramped up strongly from day 3 to day 4. Following the closure of a satellite casino, StarWorld also successfully targets at the mid-premium mass segment. In terms of its brand - the “Galaxy” brand and trademarks are owned by the listed entity GEG, with no royalty fees or "leakage" to a separate holding company, ensuring 100% alignment and financial efficiency. Looking ahead, GEG remains interested but disciplined, focusing only on opportunities accretive to profitability and requiring a strong balance sheet to act quickly when the right project emerges.
Forward strategy. GEG continues to leverage on its completed convention and arena facilities to drive high-value repeat visitation. Its focus also stays with premium mass customers, disciplined cost management, and operational excellence. The development of Phase 4, targeted for completion in 2027, is central to setting a new standard in customer experience and strengthening Galaxy Macau's position as a leading global integrated resort destination. Management expressed strong confidence in the medium- to long-term prospects for both Macao and GEG.
A promising outlook. Macau’s strong start to 2026, illustrated by 1.55mn visitors over the Chinese New Year period with major resort hotels fully occupied, underscores sustained demand driven by enhanced attractions and marquee events. GEG expects the Macau gaming market to remain highly competitive, particularly in the premium mass segment, and will focus on differentiation through product and service quality, operational excellence, customer engagement and technological innovation. The Group will further leverage its regional marketing presence in Tokyo, Seoul, Bangkok and Singapore, continue to ramp up Phase 3 assets such as GICC, Galaxy Arena, Raffles and Andaz, and advance Phase 4 to support Macau’s vision as a World Centre of Tourism & Leisure. GEG will also actively pursue international development opportunities that align with its strategic blueprint and are of sufficient scale to make a meaningful contribution to EBITDA, while remaining vigilant to global economic and geopolitical developments.
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