Daily casino drop and win to-date in the third quarter at Macau gaming operator Galaxy Entertainment Group Ltd “are already at 120 percent of 2019 levels,” says a Thursday note from CBRE Securities LLC.
The commentary from analysts John DeCree and Max Marsh cited remarks by the casino group’s management, following its first-half results filed in Hong Kong that day.
The “pace into third-quarter 2023 is accelerating,” added the analysts.
Galaxy Entertainment in not the only Macau casino operator claiming to have surpassed during the third quarter, its 2019 casino drop levels. Craig Billings, chief executive of Wynn Resorts Ltd, parent of Macau operator Wynn Macau Ltd, had mentioned on that group’s second-quarter earnings call a week earlier, that July daily mass drop at its two Macau properties had reached 120 percent of the 2019 daily mass drop.
Regarding Galaxy Entertainment’s trading outlook, Andrew Lee, an analyst at Jefferies Hong Kong Ltd, mentioned the “strong start” to the third quarter observed by management, based on drop and win.
Mr Lee indirectly cited Galaxy Entertainment’s leadership saying the opening of facilities at Phase 3 of Galaxy Macau, the casino group’s Cotai flagship, had a “positive impact”.
That included the Raffles at Galaxy Macau hotel, as well as the “new Horizon Premium Club”, a gambling facility within the tower hosting the Raffles at Galaxy Macau hotel.
CBRE Securities cited some management commentary on Phase 4 of Galaxy Macau.
“Construction on Phase 4 is already well under way and the topping off of four towers [is] expected by year-end.”
The institution added: “Phase 4 will have a strong focus on non-gaming, primarily MICE [meetings, incentives, conferences and exhibitions], entertainment, and family facilities, but will also include some gaming.”
Mr DeCree and Mr Marsh further stated: “Phase 4 will include six high-end hotels, a 4,000-seat theatre, extensive food and beverage [facilities], retail, and non-gaming amenities, and a water resort deck. Upon completion of Phase 4, Galaxy’s Macau hotel capacity will be approximately 7,500 rooms.”
Premium mass outpaces base recovery
Jefferies’ Mr Lee noted the group said it had been “gaining market share in August”.
The brokerage said Galaxy Entertainment mentioned that the premium-mass gambling segment was “recovering ahead of base mass,” with the latter’s performance being “in line” with total visitor volume.
Mr Lee also indirectly quoted the casino group as stating there had been “minimal impact” to its Macau gaming resort business regarding the resumption of “group tours for mainland China visitors to Japan and South Korea”.
The mainland China authorities announced last week that they will allow outbound group travel by mainland residents to a greater number of destinations, including Japan, South Korea, Australia and the United States. Such trade had been disrupted by the Covid-19 pandemic.
Jefferies said the “positive surprise” from Galaxy Entertainment’s first-half results was the special dividend of HKD0.20 (US$0.02555) per share, which “reflects their optimistic outlook”.
But Mr Lee added: “The key negative was flagship Galaxy Macau’s margin falling quarter-on-quarter but due to lower retail sales.” He noted that such sales in the first quarter this year had been “exceptionally high”.
Jefferies said that market-wide monthly casino gross gaming revenue (GGR) showed sequential improvement, with August’s month-to-date daily performance at MOP553 million (US$68.6 million), versus MOP537 million daily in July, and MOP500 million in the second quarter.
Mr Lee wrote that, for Macau as whole, Jefferies had updated its GGR forecasts for 2023 and 2024 at “63 percent and 74 percent… of 2019 pre-pandemic levels, at MOP504 million per day and MOP591 million per day.” That compared with the institution’s previous estimates respectively of 45 percent and 62 percent of pre-pandemic levels.
“We assume mass GGR is at 86 percent and 100 percent of 2019 pre-pandemic levels in 2023 and 2024,” added Mr Lee.
