The management of Macau casino operator Galaxy Entertainment Group Ltd says that while player reinvestment in the Macau market “has risen”, especially in the upper end of the premium-mass segment, the trend “has now stabilised”.
The comments were made by the casino firm’s management on a conference call with investment analysts, according to a Thursday memo from Seaport Research Partners.
On Thursday, Galaxy Entertainment reported group-wide adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of nearly HKD3.18 billion (about US$408 million) for the second quarter, up 11.6 percent sequentially.
“Galaxy did intensify player reinvestment in mass – we estimate 150 basis points – but this came with meaningful share gain, and corresponding EBITDA gains,” remarked Seaport analyst Vitaly Umansky in his latest memo on the company.
Galaxy Entertainment’s main gaming operations are at Galaxy Macau in Cotai, and StarWorld Hotel downtown on Macau peninsula.
JP Morgan Securities (Asia Pacific) Ltd said in its own note that Galaxy Entertainment’s cost-management results were “somewhat mixed” in the three months to June 30.
The firm’s “solid” operating expenditure control, “down 3 to 4 percent quarter-on-quarter” according to JP Morgan estimates, was “offset by a step-up in reinvestments,” said analysts DS Kim, Mufan Shi, and Selina Li.
They added: “This, however, is not too worrying per se, considering that second-quarter results so far confirmed competitive/promotional environments are overall stable … and that Galaxy did gain shares on the back of such spending.”
As competition among Macau operators is increasing, especially for customers in the premium-mass segment, companies have been spending more in promotional and reinvestment activity, according to industry commentators.
The management of market rival Melco Resorts & Entertainment Ltd said earlier this week that despite a “very competitive environment” in Macau, player reinvestment had not accelerated in the April to June period, though noted “it remained high through the second quarter”.
“We’re probably at an elevated period in the history of the market and that it will eventually unwind and come down,” stated Evan Winkler, Melco Resorts president, on his company’s second-quarter earnings call.
“I don’t necessarily in the near term see it coming down significantly, but I don’t see it going up,” he added.
On Thursday, Galaxy Entertainment’s management was also quoted as saying that the ongoing crackdown on Macau money touts was “not having any material impact on the business”.
“Most players have access to liquidity and revenues should not be impacted by government initiatives with respect to this activity,” said Seaport, citing the casino operator’s executives.
Macau aims to criminalise unlicensed money-changing within a casino setting for the purposes of gambling. The provision specifies that unlicensed money-changing would be criminalised when taking place in gaming or non-gaming areas of casino venues.
