GGRAsia – Galaxy likely only Macau op with 2024 dividend: Jefferies

Galaxy likely only Macau op with 2024 dividend: Jefferies

Feb 15, 2024 Newsdesk Latest News, Macau, Top of the deck

Brokerage Jefferies says it expects Galaxy Entertainment Group Ltd to be the only one of Macau’s six casino operators to pay a dividend during 2024. Hong Kong-based analyst Andrew Lee cited as one element for such a view conversation with Galaxy Entertainment management at an event for investors in the United Kingdom’s capital, London.

“Given their strong financial position, we expect Galaxy will remain the only [Macau] operator to pay dividend” in 2024, “and be in a position to possibly raise their payout ratio this year,” stated Mr Lee in a Wednesday memo.

He noted: “Galaxy was the only operator to pay a dividend during first half 2023 and we expect the same for second-half 2023 and 2024 results.”

The analyst added: “Historically, the company’s dividend payout policy is approximately 30 percent, but we think the payout ratio could be gradually increased given strong financial position.”

The dividend payout ratio is typically calculated based on the total amount of dividends paid out to shareholders relative to the net income of a company.

“We expect payout ratio to be unchanged during second-half 2023 results, slated February 28, but could be raised during first-half 2024 results,” added Mr Lee.

Jefferies said, referring to the ongoing expansion of Galaxy Entertainment’s flagship Galaxy Macau resort (pictured) on Cotai: “From the remaining HKD23-billion [US$2.94-billion] Phase 3 and 4 capital expenditure, the company already had HKD23 billion cash at end third-quarter 2023.”

Fitch Ratings Inc said in a recent note it now expects another Macau casino operator –Sands China Ltd – to resume dividend payments “in 2026”. In a previous update in July, the institution had mentioned such payments might resume in 2025.

Wynn Resorts Ltd – United States-based parent of Macau operator Wynn Macau Ltd – said during the group’s fourth-quarter earnings call on February 7 it had to consider the business’s “leverage profile in Macau” before being able to make any commitment on timing for the Macau unit to resume paying dividends.