A research report from Goldman Sachs indicates that GALAXY ENT (00027) announced its full-year results for the period ending December 31 yesterday (26th). The fourth-quarter performance was robust, as anticipated by Goldman Sachs, with EBITDA increasing 29% quarter-on-quarter to HK$4.3 billion, aligning with the firm's expectations and reaching the upper end of the market consensus range of HK$3.6 billion to HK$4.3 billion. The "Buy" rating was maintained.

The group declared a final dividend of HK$0.8 per share, representing a payout ratio of 64% of its second-half 2025 earnings. This marks a further increase compared to the 58% payout in the first half of 2025 and the 50% payout for the full 2024 fiscal year. Management expressed an intention to distribute at least 65% of earnings going forward. Goldman Sachs believes the group possesses ample financial capacity to further raise dividends, potentially adopting a progressive dividend policy similar to Sands China (01928). This is considered feasible because the remaining HK$18 billion capital expenditure for Phase 4 of Galaxy Macau is expected to be comfortably covered by its strong free cash flow and net cash reserves of HK$35 billion.

Goldman Sachs noted that the upcoming National People's Congress meetings from March 4th to 11th could potentially impact gaming and tourism demand. Regarding financial forecasts, Goldman Sachs made minor adjustments of less than 1% to its EBITDA projections for GALAXY ENT for the 2026 and 2027 fiscal years. Using a sum-of-the-parts valuation methodology, the firm lowered its 12-month target price from HK$54 to HK$53.4.

While the group has achieved its medium-term target of a 22% market share in total gaming revenue, Goldman Sachs believes there is further room for growth. This outlook is supported by the ongoing development of Phase 3 projects (such as the Capella Hotel), the renovation of the StarWorld Hotel, and the phased opening of Galaxy Macau's Phase 4 starting next year. The stock's current valuation is considered not high, trading at a projected 2026 enterprise value multiple of 10 times.