Galaxy Entertainment Earnings: Recovery Continues, Market Share Gains Start

Galaxy Entertainment's third-quarter results were in line with our expectations, reflecting continued recovery in both the gaming and nongaming segments. Notably, Galaxy gained decent gross gaming revenue market share of 18.5% in the quarter, from 17.4% in the prior quarter, following the progressive launch of Galaxy Macau Phase 3. Management also sees strong momentum into the fourth quarter, with quarter-to-date mass drop volume 10%-20% above the level in 2019, along with further market share gains. We maintain our HKD 52 fair value estimate after a minor tweak to our earnings forecasts. We think the shares are slightly undervalued as of Nov. 9's market close. We believe narrow-moat Galaxy’s premium asset quality and strong project pipeline make it best positioned for long-term growth.