Galaxy Entertainment Equity Research Report
Final Paper: Galaxy Entertainment Group (Hong Kong Stock Exchange: 0027)
1. Company Overview
Galaxy Entertainment Group ("Galaxy") is a major player in the gaming and entertainment industry in Macau Special Administrative Region ("Macau SAR"). The company currently operates six casinos, including the major casino attraction - Galaxy Macau - which was opened on 15 May 2011.
2. Recommendation
The share is currently trading at 13% discount and therefore we suggest a buy recommendation. This is primarily based on the future revenue stream from future expansion of Galaxy Macau, a strong land bank, market growth and strong management team whom are closely aligned with the company.
3. Alignment of Interest
There is a fairly strong alignment of interest within the company.
The Lui family owns 50.3% of the shareholdings through direct holding (8.6%) as well as indirect interest via the Lui Family Trust and another Hong Kong listed company, K Wah International.
Please note that the top shareholder primarily holds board member positions and they primarily hold backgrounds in the property construction industry. The key management team members, who do not have as strong shareholding ties to the company, are generally brought in from the west, with more specific skills surrounding the casino industry or financial services industry.
However, we conclude there is a fairly strong alignment of interest due to the active report the Lui family members play in the running of the hotel resorts.
Exceptional Management: Galaxy's management has proven its long-term commitment to shareholders by mainly increasing shareholder value through appropriate investments financed primarily through retained earnings and debt financing, with only minimal dilution of equity (only three major issues in 2005, 2007 and 2011).
Financing / Dividend Policy: Galaxy have yet to announce a dividend programme primarily due to capital investment in Galaxy Macau. This report assumes
1. Company Overview
Galaxy Entertainment Group ("Galaxy") is a major player in the gaming and entertainment industry in Macau Special Administrative Region ("Macau SAR"). The company currently operates six casinos, including the major casino attraction - Galaxy Macau - which was opened on 15 May 2011.
2. Recommendation
The share is currently trading at 13% discount and therefore we suggest a buy recommendation. This is primarily based on the future revenue stream from future expansion of Galaxy Macau, a strong land bank, market growth and strong management team whom are closely aligned with the company.
3. Alignment of Interest
There is a fairly strong alignment of interest within the company.
The Lui family owns 50.3% of the shareholdings through direct holding (8.6%) as well as indirect interest via the Lui Family Trust and another Hong Kong listed company, K Wah International.
Please note that the top shareholder primarily holds board member positions and they primarily hold backgrounds in the property construction industry. The key management team members, who do not have as strong shareholding ties to the company, are generally brought in from the west, with more specific skills surrounding the casino industry or financial services industry.
However, we conclude there is a fairly strong alignment of interest due to the active report the Lui family members play in the running of the hotel resorts.
Exceptional Management: Galaxy's management has proven its long-term commitment to shareholders by mainly increasing shareholder value through appropriate investments financed primarily through retained earnings and debt financing, with only minimal dilution of equity (only three major issues in 2005, 2007 and 2011).
Financing / Dividend Policy: Galaxy have yet to announce a dividend programme primarily due to capital investment in Galaxy Macau. This report assumes