GGRAsia – Galaxy Ent flags special dividend as 2Q EBITDA improves

Galaxy Ent flags special dividend as 2Q EBITDA improves

Aug 25, 2016 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator Galaxy Entertainment Group Ltd reported first half profit up 26 percent year-on-year. Such profit was HKD2.6 billion (US$335.3 million), including HKD350-million of non-recurring charges.

The firm also announced a special dividend of HKD0.18 per share, to be paid on or about October 28.

“In the second quarter 2016, earnings at Galaxy Entertainment Group rebounded – as expected – from a year earlier, where they were impacted by costs related to the opening of Galaxy Macau Phase 2 and Broadway Macau,” said the firm in its interim results filing to the Hong Kong Stock Exchange on Thursday, referring to the group’s two casino property openings on Cotai in May 2015.

The group’s second-quarter 2016 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were up 22 percent year-on-year, at HKD2.3 billion; but down 7 percent quarter-on-quarter.

Galaxy Entertainment’s revenue for the second quarter was up 4 percent year-on-year to HKD12.2 billion.

The group’s total gaming revenue on a “management basis” in the three months to June 30 was up 3 percent year-on-year to HKD11.5 billion. Total mass table games revenue for the second quarter was up 28 percent year-on-year to HKD5.0 billion and total VIP revenue was down 13 percent from the prior-year period, to HKD6.0 billion. The firm clarified that the term “management basis” – when referring to group gaming revenue – accounted for the partnership it has with other parties in the running of its City Clubs gaming properties in downtown Macau.

In the six months to June 30 this year, Galaxy Entertainment reported revenue and group adjusted EBITDA of HKD25.5 billion and HKD4.7 billion; up 1 percent and 13 percent year-on-year respectively.

“The Macau market continues to show gradual signs of stabilisation,” said the firm’s chairman Lui Che Woo, in a press statement following the results, adding that “strong focus on operational efficiency and prudent cost control” had contributed to the first half growth in group adjusted EBITDA.

The firm said in its results filing it “continued to move forward” with Phase 3 of Galaxy Macau, with “the potential to commence site preparation works in late 2016 and Phase 4 in 2017”. Galaxy Entertainment added the additional development would have “substantial floor area allocated to non-gaming… primarily targeting meetings, incentives, conferences and events (MICE), entertainment and family facilities”.

The company added: “We expect to be able to provide additional information on our development plans in late 2016 or early 2017.”

Property performance

At Galaxy Macau, second quarter adjusted EBITDA was HKD1.9 billion, up 34 percent year-on-year and down 7 percent quarter-on-quarter.

Second quarter VIP revenue at Galaxy Macau was HKD4.4 billion, down 5 percent year-on-year and 19 percent quarter-on-quarter. Mass gaming revenue at the Cotai property for the period was HKD3.3 billion, up 30 percent year-on-year but down 1 percent from the previous quarter. Galaxy Macau’s electronic gaming revenue for the three months to June 30 was HKD447 million, up 18 percent year-on-year and 17 percent quarter-on-quarter.

For Broadway Macau, next door, second quarter adjusted EBITDA was HKD6 million.

At the group’s original flagship property StarWorld Macau on the city’s peninsula, second quarter adjusted EBITDA was HKD465 million, down 9 percent year-on-year and down 9 percent quarter-on-quarter.

StarWorld Macau’s second-quarter VIP gaming revenue was HKD1.5 billion, down 30 percent year-on-year and down 11 percent quarter-on-quarter. Mass gaming revenue at the venue during the second quarter was HKD1.1 billion, up 20 percent year-on-year but down 3 percent quarter-on-quarter. StarWorld Macau’s electronic gaming revenue for the period stood at HKD18 million, down 45 percent year-on-year and down 25 percent quarter-on-quarter.

The group said its balance sheet remained “well capitalised, liquid and virtually debt free,” with cash and liquid investments standing at HKD11.3 billion as of June 30, up 46 percent from December 31, 2015. The firm stated it had debt of HKD1.2 billion and net cash of HKD10.1 billion as at June 30.