00027 Overview

Market Performance: The Hang Seng Index (HSI) fell by 570 points (2.1%) to 26,059, while the Hang Seng Tech Index (HSTI) dropped 148 points (2.9%) to 4,989, with a total market turnover of $357.68 billion.

Declining Heavyweights: Major stocks like Xiaomi, Meituan, and Alibaba experienced significant declines, with Xiaomi down 5% and Alibaba down 4.5%, amidst high short selling ratios.

Gainers in the Market: Xinyi Glass and CNOOC were notable gainers, with Xinyi Glass rising 12.4% to a new high, while CNOOC increased by 5.6%.

Volatile Stocks: Several stocks faced sharp declines, including Guofuhee, which plummeted 19.2%, and Dmall, which fell 13.1%, indicating a volatile trading environment.

Macau's GGR Performance: Macau's gross gaming revenue (GGR) for February increased by 4% year-on-year to MOP20.6 billion, exceeding market expectations, with a notable surge in the last week of February driven by high-end customer demand.

Investor Recommendations: JPMorgan advised investors to be selective, favoring GALAXY ENT with a target price of HKD52, while rating SJM HOLDINGS and MELCO INTERNATIONAL DEVELOPMENT as Underweight with lower target prices.

Macau's GGR Performance: Macau's Gross Gaming Revenue (GGR) for February rose by 4.5% year-on-year to MOP20.6 billion, exceeding market expectations of 1% growth, driven by strong demand towards the end of the month.

Market Analysis: The gaming sector in Macau is currently valued at 10.1 times the projected 2026 EV/EBITDA, with GALAXY ENT and MGM CHINA identified as top picks by CLSA, despite recent short selling activity.

Macau's GGR Performance: Macau's Gross Gaming Revenue (GGR) for February increased by 4.5% year-on-year to MOP20.6 billion, surpassing a downgraded market forecast of 1% but falling short of CLSA's expectation of 7.4%.

Strong End to February: Despite a weak performance in mid-February, GGR showed a strong average of MOP1.053 billion from February 23 to 28, indicating a positive outlook for March.

March GGR Forecast: CLSA anticipates a 9.7% year-on-year growth in Macau's GGR for March, projecting it to reach MOP21.6 billion, although this is 3% lower than market expectations.

Top Stock Picks: CLSA identifies Galaxy Entertainment and MGM China as its top stock picks, with notable short selling activity reported for both companies.

Annual Results Announcement: GALAXY ENT reported its annual results for FY2025, with 4Q25 results surpassing market expectations, a market share increase of 160 bps QoQ to 21.7%, and a profit growth of 29% QoQ.

Dividend Performance: The final dividend per share (DPS) of $0.8 reflects a 61% payout ratio for FY2025, meeting broker estimates but disappointing some investors hoping for a higher return.

Analyst Ratings: JPMorgan maintained an Overweight rating for GALAXY ENT, designating it as a top pick with a target price of $52, while expressing a selective outlook on the gaming sector.

Future Expectations: There are expectations for gradual dividend increases, with potential positive developments anticipated in the interim results for FY2026, set to be announced in August.

Financial Performance: Goldman Sachs reported that GALAXY ENT achieved strong 4Q25 results with EBITDA growth of 29% QoQ to HKD4.3 billion, aligning with expectations and the upper end of consensus estimates.

Dividend Policy: The company declared a final DPS of HKD0.8 for 2H25, increasing its earnings payout to 64%, with management indicating plans to maintain a minimum 65% payout in the future.

Future Outlook: Goldman Sachs believes GALAXY ENT has sufficient financial capacity to increase dividends or adopt a progressive dividend policy, supported by strong free cash flow and substantial net cash reserves.

Market Impact: The upcoming "Two Sessions" from March 4 to 11 may influence gaming and tourism demand, leading Goldman Sachs to slightly adjust its EBITDA forecasts for FY26-27 and lower the 12-month target price from HKD54 to HKD53.4 while maintaining a Buy rating.