The combined capital expenditure for Phase 3 and Phase 4 of the Galaxy Macau casino resort is “unchanged” at between HKD40 billion (US$5.1 billion) and HKD50 billion, the management of the venue’s promoter, Galaxy Entertainment Group Ltd, has told banking group Morgan Stanley during an online conference for the investment community.
A Wednesday note from the institution, by Morgan Stanley Asia Ltd analysts Praveen Choudhary and Gareth Leung, added Galaxy Entertainment said it had so far spent “HKD12 billion to HKD15 billion” on Phase 3 and Phase 4 in aggregate. The project is located in Macau’s Cotai district.
Morgan Stanley said in its memo of the investor-sector online event that Galaxy Macau “Phase 3A is expected to open in early 2022 and Phase 4 could be in in 2024”.
Francis Lui Yiu Tung, vice chairman of Galaxy Entertainment, had said in mid-August, during an online press conference to discuss the firm’s second-quarter and first-half results, that the Covid-19 pandemic made it difficult to provide an exact opening date for Phase 3 of Galaxy Macau.
In its first-half earnings statement issued to the Hong Kong Stock Exchange, the company modified its language to describe the target date for opening a Raffles-branded hotel (pictured, centre) with a 450 all-suite tower, due to be part of Phase 3.
In its first-quarter highlights in May, the firm had mentioned the “later part of 2021 or early 2022” for the launch of Raffles. In the first-half and second-quarter results, it mentioned simply a target of “early 2022”.
In its latest results update, Galaxy Entertainment mentioned Phase 3 and Phase 4 would have in total approximately 3,000 rooms, some casino space, a large-scale arena with 16,000 seats, and 400,000 square feet (37,161 sq metres) of space for meetings and conventions.
Morgan Stanley said in its Wednesday note, citing the casino firm’s management, that hotel occupancy at Galaxy Entertainment’s properties was “progressing towards 50 percent currently”.
That was up from “30 percent to 35 percent” during the Covid-19 “outbreak in the first half of August” – a reference to a Macau family of four getting infected with the Delta variant of Covid-19, as confirmed on August 3, and which saw tighter restrictions on inbound travel to Macau from mainland China.
Nonetheless the current hotel occupancy rate for the group was “still lower” than the “60 percent to 65 percent” experienced in July, said the Morgan Stanley memo, citing management.
Operations at Galaxy Entertainment’s 320-room Broadway Macau hotel, next door to Galaxy Macau, were suspended in the second quarter. As of Friday, the booking engine for Broadway Macau was not currently accepting bookings for the property for any date in September.
Morgan Stanley’s Wednesday memo noted that “management expects more clarity on Hengqin and Macau development to be announced soon”. The former was a reference to a piece of mainland China territory next door to Macau, which already has non-gaming tourism infrastructure.
Morgan Stanley stated that Galaxy Entertainment had “signed a development memorandum of understanding” with the government of the mainland’s Guangdong province regarding a 2.7-square-kilometre (1.0-sq-mile) piece of land on Hengqin island, “with a committed investment size” of CNY10 billion (US$1.5 billion).
“It has not spent much capital on the land yet,” said Morgan Stanley, citing Galaxy Entertainment.
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