Galaxy's earnings jumped 23% to HKD5.8b

On the back of higher revenue.

According to Maybank Kim Eng, Galaxy recorded 1H13 revenue and EBITDA of HKD30.8 billion and HKD5.8b which increased 9% YoY and 23% YoY. 2Q13 Adjusted EBITDA of HKD3.02 billion represents an increase of 18% YoY, which are 8.8% higher than Maybank's estimates and 5.7% higher than Bloomberg consensus estimates. 

Here's more:

Implication: The beat in estimates of Galaxy’s 2Q13 EBITDA was primarily a result of lucky hold rates in the mass market segment at both Galaxy Macau and StarWorld which rose by 8.7ppts and 9.7ppts YoY to 37.1% and 32.2% respectively.

The VIP segment registered slightly negative growth with rolling chip turnover, declining by 4% YoY at Galaxy Macau, while win rates remained stable.

As a result of a better than expected performance at mass market segment, EBITDA margin at Galaxy Macau rose 4ppts to 22% for 1H2013.

Action: Galaxy trades at 15x of FY13 EV//EBITDA which is higher than the industry average of 13x. Galaxy has since the start of year re-rated positively with its strong expansion pipeline at its Galaxy Macau property; where 2nd phase is anticipated to be completed earlier than peers by mid-2015.

We have a Hold rating at a target price of HKD42.80.