Galaxy Entertainment posts first quarterly profit gain

Macau casino operator Galaxy Entertainment Group has reported solid results for 16Q1, according to unaudited 2016 first quarter financial data released on Wednesday.

The Group posted quarterly revenue of HK$13.4 billion (US$1.7 billion), up 1 percent sequentially and down 2 percent year on year. Adjusted EBITDA was HK$2.4 billion, down 2 percent sequentially and up 6 percent year on year.

The operator said its hotels were virtually fully occupied for the quarter, with solid performance driven by mass.

“We continue to see signs that the market is potentially stabilizing in the near term and remain confident in the long term prospects of Macau,” said Dr. Lui Che Woo, chairman of Galaxy Entertainment Group.

Galaxy Macau reported adjusted EBITDA at HK$2 billion, up 12 percent year on year, while StarWorld Macau adjusted EBITDA was HK$512 million, down 15 percent year on year. Broadway Macau reported adjusted EBITDA at HK$3 million for the quarter.

With regards to Galaxy’s Cotai Phases 3 and 4, the operator said site investigation works were expected to commence this year.

Earlier this year Lui Che-Woo said he will be venturing into family friendly theme parks as part of the next two phases of the HK$86 billion (US$11 billion) Galaxy Macau project, according to an interview with Bloomberg.

Lui said the theme park will be “something special and high-tech” similar to the movie “Avatar.” The theme park will be smaller but more unique than larger theme parks, Lui added.

As well as this, the operator announced that plans to develop a resort in Hengqin are moving forward, and opportunities in overseas markets will also be explored.

Bernstein said the Q1 results were slightly better than its estimates, as the company continues to benefit from the ramp up of Galaxy Macau Phase 2, stabilization in mass market and shift of VIP capacity to Mass and Premium Mass; as well as cost reductions.

“We still see Galaxy as underperforming its true potential in Mass. Galaxy has the largest land inventory in Cotai and in the long-run, this land bank could be the key to continuing to reposition towards a Mass focus (especially with increase in hotel room inventory and MICE capabilities),” said the brokerage.