According to a report, Goldman Sachs has maintained a 'Buy' rating on Galaxy Entertainment (00027) with a target price of HK$53.2.

The report notes that following a meeting with the company's management on July 2, the recent softness in Macau's gross gaming revenue (GGR) for June, which fell 12% year-on-year compared to a 7% increase in May, was attributed to the FIFA World Cup diverting gambling expenditure more than anticipated. This was due to the tournament's extended duration of 39 days and the expansion to 48 participating teams. A high base from the same period last year, which included a Jacky Cheung concert, also contributed to the decline.

Management Forecasts Positive Shift

Looking ahead, the company's management anticipates an improvement in the GGR trend for July. This expectation is based on a reduced schedule of World Cup matches during the month, with 32 games compared to 72 in June. Galaxy Entertainment is also enhancing its event lineup, having invited Cantonese singers Eason Chan and Joey Yung to perform at the "K Song King" concert from July 24 to 26.

Revenue Projections for July

Assuming daily GGR remains around MOP 600 million until the World Cup concludes on July 19, followed by a recovery to approximately MOP 700-800 million for the remainder of the month, the firm estimates July's total GGR will range between MOP 20 billion and MOP 21 billion. This would represent a narrowed year-on-year decline of 5% to 11%, an improvement from the 12% drop seen in June.

Favorable Base Effect for Later Months

The report further highlights that the daily GGR average from August to December last year was MOP 696 million, which is lower than the MOP 718 million average recorded from January to May this year, suggesting a relatively low base for comparison in the coming months.