Macau casino operator Galaxy Entertainment Group Ltd on Wednesday posted a profit of HKD10.50 billion (US$1.34 billion) for full-year 2017, up 67.2 percent from the prior year. The 2017 profit improvement was supported by an increase in gaming revenue, said the company.
Group revenue for the period was up 18.2 percent year-on-year, to HKD62.45 billion, the firm said in a filing to the Hong Kong Stock Exchange.
The company declared a special dividend of HKD0.41 per share for the year, to be paid on April 27. It is in addition to the two special dividends of HKD0.26 and HKD0.33 per share already paid during the 12 months.
“Our focus on operational execution in general and growing our mass and premium mass businesses specifically has been rewarded [in 2017],” said Galaxy Entertainment’s chairman Lui Che Woo in a statement included in a separate press release.
Galaxy Entertainment operates the Galaxy Macau and sister property Broadway in the city’s Cotai district. The casino firm also owns and operates the casino hotel StarWorld Macau (pictured), in downtown Macau.
There are additionally three so-called “City Clubs” in the peninsula, functioning under Galaxy Entertainment’s casino licence but managed by third parties.
Full-year group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 36.7 percent year-on-year to HKD14.15 billion.
Galaxy Entertainment said it experienced “bad luck in its gaming operations” during 2017, which decreased its adjusted EBITDA by approximately HKD37 million.
The group’s total gaming revenue in full-year 2017 was HKD58.0 billion, up 17 percent year-on-year.
Total mass-market table games revenue was HKD24.2 billion, up 15 percent year-on-year and total VIP revenue was HKD31.6 billion, up 19 percent from the prior year. Total electronic gaming revenue was HKD2.16 billion, up 9.9 percent year-on-year.
Galaxy Entertainment said it finished the year on a positive note, as its fourth quarter adjusted EBITDA increased by 40 percent year-on-year and 18 percent sequentially, to HKD4.2 billion. The firm said it “played lucky” in the three months to December 31, which contributed HKD52 million to its adjusted EBITDA in the fourth quarter.
Morgan Stanley Asia Ltd said in a note on Wednesday that Galaxy Entertainment’s fourth quarter luck adjusted EBITDA beat the brokerage’s estimate by 7 percent. “Galaxy Macau recorded strong EBITDA growth in this [fourth] quarter … from improved mass and VIP. StarWorld EBITDA declined by 6 percent quarter-on-quarter … mainly due to luck factor,” said analysts Praveen Choudhary and Jeremy An.
The firm’s flagship Cotai resort Galaxy Macau’s full-year revenue was HKD44.6 billion, up 17 percent year-on-year. The property recorded adjusted EBITDA of HKD11.1 billion, up 31 percent from a year earlier, the casino operator said.
The property’s adjusted EBITDA margin for 2017 was 25 percent, compared to 22 percent in the prior year.
VIP rolling chip volume at Galaxy Macau for full-year 2017 was HKD621.5 billion, up 27 percent year-on-year. This translated to VIP revenue of HKD23.1 billion, up 18 percent year-on-year. Revenue from mass-market gaming was HKD16.7 billion, up 19 percent year-on-year.
StarWorld Macau’s revenue last year rose by 20.0 percent year-on-year to HKD14.2 billion. Adjusted EBITDA was HKD3.0 billion, up 38 percent from a year earlier.
The property’s adjusted EBITDA margin for 2017 was 21 percent, compared to 18 percent in the previous year.
StarWorld Macau’s VIP rolling chip volume during the reporting period was HKD278.6 billion, up 30 percent year-on-year. The property recorded VIP revenue of HKD8.2 billion, up 24 percent year-on-year, said the firm. Mass gaming revenue for 2017 was HKD5.6 billion, an increase of 15 percent year-on-year.
Broadway Macau’s full-year revenue was down 24 percent year-on-year, to HKD514 million. The firm said the property experienced “bad luck” in its gaming operations in 2017. Broadway Macau saw adjusted EBITDA fall by two-thirds, to HKD10 million.
Broadway Macau – which does not offer VIP gambling – recorded mass gaming revenue of HKD262 million, down 42 percent from a year earlier.
The group’s third-party managed City Clubs contributed HKD107 million of adjusted EBITDA to group earnings in 2017, according to Wednesday’s filing.
The group said it had cash and liquid investments amounting to HKD41.4 billion and net cash of HKD31.7 billion; with group debt of HKD9.7 billion as at December 31.
“Our stable cash flows combined with a strong balance sheet provides us with great flexibility in funding our development pipeline and international expansion opportunities,” said Mr Lui, as quoted in the release.
The firm’s expansion plans include Phases 3 and 4 of Galaxy Macau, and the development of a casino resort in the Philippines. Galaxy Entertainment has also declared itself a contender for a Japanese casino licence.
(Updated at 2.34pm, Feb 28)
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"The stronger mass growth [in Macau in the second quarter] should be viewed positively vis- à-vis [the] government’s stated priority”
Japanese brokerage Nomura