Galaxy Ent dividend has room to rise despite softer 4Q outlook: Seaport

Macau casino operator Galaxy Entertainment Group Ltd has “strong potential” for its dividend to continue to rise “over the next few years”, says brokerage Seaport Research Partners. The institution nonetheless expects fourth-quarter business to be “softer” than the third quarter performance reported on Friday. Seaport estimates fourth-quarter revenue for the group – which runs StarWorld Hotel on Macau peninsula, and Galaxy Resort Macau, in the city’s Cotai district – will dip 12.9 percent year-on-year, to HKD12.04 billion (US$1.54 billion). It also forecasts a 25.2-percent year-on-year decline in the casino firm’s adjusted earnings before interest, taxation, depreciation and amortisaion (EBITDA) for the final three months of 2026, at HKD3.22 billion. Seaport anticipates Galaxy Entertainment’s market share of gross gaming revenue (GGR) for the three months to December 31 will fall 1.5 percentage points, to 20.5 percent, from a nearly two-year high of 22.0 percent in the third quarter this year. Senior analyst Vitaly Umansky also noted the firm remains “cash rich”, with significant potential to increase its dividend payments. He reiterated that the HKD0.90 interim dividend announced in August was 28 percent higher year-on-year and “better than expected”, representing an earnings payout ratio of more than 70 percent. Mr Umansky wrote: “While the company remains conservative with its cash and wants to maintain a platinum balance sheet, we believe there is strong potential for the dividend to continue to rise over the next few years as operating cash flow improves.” The brokerage noted that Galaxy Entertainment had HKD34.4 billion in net cash and investments as of September 30, adding that the group “still holds a 4.9 percent stake” in Wynn Resorts Ltd, parent of rival Macau casino operator Wynn Macau Ltd. Mr Umansky stated: “We remain of the view that Galaxy can increase its debt while returning more capital to investors via dividends: we assume a 70 percent earnings payout in 2027, but this can easily be higher if the company chooses so.”