A note from an investment analyst suggests that the targeted opening date of “Galaxy Macau Phase 2A” casino resort in Macau has been put back to May 2015, even though the building will be ready by March.
Cameron McKnight of Wells Fargo Securities LLC in New York suggested in a Monday note that the delay could signal the fact that macroeconomic and political factors in mainland China have created less than optimal conditions for a new Macau casino opening.
The wider suggestion from the investment community as a whole is that the developer Galaxy Entertainment Group Ltd was working to a twin-track timetable for Galaxy Macau Phase 2′s opening – one for public announcements (“mid-2015”) and another for the investment community (first quarter 2015).
But Michael Mecca, president and chief operating officer of Galaxy Entertainment, on Tuesday told GGRAsia: “It’s simply not correct. We have always been very consistent about our dates, and Galaxy has always been amazingly consistent about being on time and on budget.”
Factors currently weighing on Macau include mainland China’s ongoing anti-corruption campaign and stepped up scrutiny of cross border money transfer from the mainland into Macau; plus a reshuffle of Macau’s government and clear signals from President Xi Jinping that he expects the city to do more to monitor its casino industry.
Mr McKnight wrote in Monday’s note: “Checks suggest that the opening of Galaxy Macau Phase 2A may not occur until May, although the majority of the casino resort is ready to be opened by March.”
He added: “We believe this likely signals that the environment in Macau (both policy/macro settings and gaming revenues) is not healthy enough to support an opening at the moment. In any case, we believe the eventual opening of Galaxy Macau Phase 2A will be an important catalyst for the market and will likely indicate that the forward outlook for Macau has inflected.”
But Galaxy Entertainment’s Mr Mecca said: “I listened to the President’s [Xi Jinping’s] speech and he was saying exactly what we all believe – in the diversity of Macau – and he was very positive about the future of Macau, as we all are.”
GGRAsia had reported on May 12 that a Chinese New Year opening for Galaxy Macau Phase 2 was being discussed by the investment community. Credit Suisse AG analyst Kenneth Fong said in a note at the time such a timeline could still be possible. Mr Fong added construction was still on track for a “mid-2015” opening for the casino portion, and an “early 2015” opening for the shopping mall and hotel portions.
But the company has only ever referred in filings and statements to a “completion” target date for the whole of Phase 2, which is budgeted at HKD19.6 billion (US$2.5 billion). On August 19, during the firm’s first half 2014 earnings statement press conference, management referred to Galaxy Macau Phase 2 as “on schedule to complete by mid-2015”.
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”Ramp ups [of new Macau casinos] are taking a little bit longer. The market is somewhat volatile at the moment, but we continue to look at all the opportunities and are still very comfortable that things are starting to move ahead”
Chief executive of MGM China Holdings