GGRAsia – Galaxy Ent back in profit for 2021, flags special dividend

Galaxy Ent back in profit for 2021, flags special dividend

Feb 23, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator Galaxy Entertainment Group Ltd moved back into profit in 2021, compared to making a large loss in 2020.

Such profit was nearly HKD1.33 billion (US$170.0 million), versus a HKD3.97-billion loss in 2020, the firm said in a Wednesday filing to the Hong Kong Stock Exchange.

For the 12 months to December 31, it also declared a special dividend of HKD0.30 per share, payable on April 29.

The group’s gaming and entertainment segment’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) – including its share of results of joint ventures and associated companies – was HKD2.69 billion for full-year 2021, compared to a loss on such adjusted EBITDA amounting to HKD1.99 billion in full-year 2020.

The group runs its flagship Galaxy Macau casino resort (pictured) on Cotai, and StarWorld Hotel on Macau peninsula, as well as providing gaming licensing for three satellite venues in the city.

Lui Che Woo, founder and chairman of Galaxy Entertainment, said in a letter to investors, carried in a Wednesday press release from the firm, that the decision to pay a special dividend for the year “attests to our confidence in Macau, our financial strength and our future earnings potential”.

He stated: “The group’s net revenue, adjusted EBITDA and net profit attributable to shareholders, all improved in 2021 relative to 2020.”

He added that the company had been “encouraged” by its business performance over the recent Chinese New Year holiday.

Referring to ongoing constraints on the market due to Covid-19 countermeasures across the region, he stated regarding the festive period: “Even though visitor arrivals were less than anticipated due to travel restrictions, gaming revenue was solid, driven by premium mass; hotel occupancy was higher; and retails sales were strong. This is evidence of strong pent-up demand for tourism and leisure in Macau.”

The group said basic earnings per share in 2021 were HKD0.305, versus a loss per share of HKD0.916 in 2020.

Dividend a ‘surprise’

Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Wednesday note that the news of a special dividend was a “surprise”, adding it was the “first resumption among Macau operators” of a dividend payment, and a “good gesture”.

Such policy had been suspended among the six Macau operators at varying stages during the ongoing Covid-19 pandemic crisis.

Though analysts DS Kim, Amanda Cheng and Livy Lyu noted: “The size itself isn’t big, at HKD0.30 per share, 0.7 percent at current [share] price, and reflects the strength of its balance sheet, i.e., HKD27 billion net cash, 14 percent of market capitalisation.”

Total group revenue went up by just under 53.0 percent year-on-year, to nearly HKD19.70 billion in the year to December 31. Casino gross gaming revenue for 2021 was up 52.5 percent, at just over HKD16.8 billion. Revenue from hotel, mall operations and an “others” category rose 69.5 percent, to HKD2.66 billion.

Full-year expenses on commissions and incentives rose 14.0 percent, to HKD2.79 billion.

Galaxy Entertainment said its balance sheet “remains liquid and healthy”. As of 31 December, cash and liquid investments amounted to HKD33.40 billion, and net cash amounted to HKD27.0 billion. Total debt was HKD6.40 billion.

The firm said the net debt amount “primarily” reflected its ongoing treasury yield management initiatives “where interest income on cash holdings exceeds corresponding borrowing costs”.

The firm added: “Core debt remained minimal. This provides us with valuable flexibility in managing our ongoing operations and allows us to continue investing in our longer-term development plans.”

The group has been working on a Phase 3 and Phase 4 of Galaxy Macau. The chairman reiterated in his letter the management’s position it would “align the openings” of those additional facilities relative to “market conditions”.

4Q EBITDA jumps sequentially

Fourth-quarter adjusted EBITDA rose 3.3 percent year-on-year, to HKD1.04 billion. Such EBITDA was up 107.4 percent sequentially, compared to the HKD503.0-million in the third quarter.

But rolling chip volume associated with VIP play at Galaxy Macau was down 61.3 percent year-on-year in the fourth quarter, at HKD11.44 billion, from HKD29.55 billion. Judged sequentially from the third quarter, fourth-quarter rolling volume dipped 39.5 percent.

Full-year rolling chip volume was down 1.9 percent year-on-year, at HKD87.54 billion

Collaboration between Macau casino operators and government-licensed VIP gaming promoters – also known as junkets, and traditionally a source of much of Macau’s high-roller play – has mostly been suspended for now, according to various statements made recently by the city’s casino operators.

Galaxy Macau’s fourth-quarter mass-market table game drop was up 6.5 percent year-on-year, to nearly HKD7.83 billion. Sequentially from the third quarter, it was down 18.7 percent.

Full-year mass table drop at the property was up 96.9 percent, at nearly HKD29.52 billion.

Electronic gaming volume at Galaxy Macau was up 1.5 percent year-on-year in the fourth quarter, to nearly HKD3.11 billion. Sequentially from the three months to September 30, it was up 5.5 percent.

Full-year 2021 electronic gaming volume at Galaxy Macau rose 45.5 percent year-on-year, to just under HKD12.74 billion.