GGRAsia – Galaxy Entertainment 1Q EBITDA at US$244mln

Galaxy Entertainment 1Q EBITDA at US$244mln

May 22, 2023 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator Galaxy Entertainment Group Ltd reported first-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of just below HKD1.91 billion (US$244.2 million). That compared with adjusted EBITDA of HKD575 million a year earlier, and a negative figure of HKD163 million in fourth-quarter 2022.

First-quarter net revenue rose 72.0 percent year-on-year, to HKD7.05 billion. Such revenue was up 141.9 percent sequentially.

The firm gave the information in unaudited first quarter performance highlights, filed with the Hong Kong Stock Exchange on Monday.

“Galaxy Entertainment finished the Macau’s first quarter earnings season on a positive note, with yet another beat in EBITDA … and solid mass performance (70 percent-plus recovery versus pre-Covid, versus the industry’s 65 percent),” said a note from analysts DS Kim and Mufan Shi of JP Morgan Securities (Asia Pacific) Ltd.

The group’s first quarter gross gaming revenue (GGR) was nearly HKD6.07 billion, up 79.4 percent from the prior-year period. Judged sequentially, it increased by 232.5 percent.

Mass GGR was HKD4.93 billion, up 86.0 percent year-on-year and 213.7 percent quarter-on-quarter. Revenue from electronic gaming stood at HKD337 million, up 108.0 percent year-on-year and 227.2 percent sequentially.

First-quarter rolling chip volume rose 20.3 percent year-on-year, to HKD21.55 billion. It was up 216.2 percent quarter-on-quarter. GGR in the VIP segment was HKD794 million, up 40.3 percent year-on-year and 436.5-percent higher sequentially.

During the first quarter, just over 60 percent of hotel rooms of Galaxy Entertainment’s portfolio were available “due to staffing constraints,” noted the casino firm. “Currently we are effectively fully staffed for our existing resorts and all rooms are available except for Broadway Hotel,” it added.

The company chairman, Lui Che Woo (pictured), noted in remarks included in Monday’s filing that visitor arrivals, hotel occupancy, gaming revenue and retail sales in Macau “have all seen good growth” following the relaxation in early January of Covid-19-related countermeasures.

“It has been very pleasing to see solid pent-up customer demand following the relaxation of travel restrictions,” he stated.

“We were particularly encouraged by the performance over the Chinese New Year Golden Week which demonstrated solid demand,” said Mr Lui, referring to a festive period that this year fell towards the end of January.

The chairman also said the group expected “further improvements” during the second quarter this year, “as more existing facilities come online following additional staff recruitment, expanded flight and ferry capacity, and the opening of new amenities” as part of Phase 3 of its flagship property, Galaxy Macau.

“The re-opening after Covid-19 and Phase 3 expansion will generate 900 new jobs for locals,” said Mr Lui.

The Galaxy International Convention Center had a “soft opening” in April, hosting its first large-scale event. The 16,000-seat Galaxy Arena also had a soft opening in April, and it hosted two concerts by South Korean girl group Blackpink last weekend.

Phase 3 also includes two hotels. The Raffles tower, with 450 rooms, and the Andaz Macau, with 700 rooms.

Galaxy Entertainment said it was “recruiting additional staff” in preparation for the opening of the two new hotels “later this year”. Earlier this month, the company told GGRAsia that the Raffles tower and Andaz Macau were likely to open in the second half of this year.

In a Monday memo, Jefferies Group LLC analyst Andrew Lee said Galaxy Entertainment remained the institution’s “top pick in the sector”. That was due to “attractive product, net cash and Phase 3 opening, which will attract foot traffic given new product with soft opening since April 2023.”

As of March 31, Galaxy Entertainment’s cash and liquid investments were HKD28.7 billion and net cash was HKD21.3 billion. Total debt was HKD7.4 billion, which the firm said primarily reflected its “ongoing treasury yield management initiatives”.