The management of Macau casino operator Galaxy Entertainment Group Ltd says the launch date for the first portion of Phase 3 of its flagship Cotai casino resort, Galaxy Macau (pictured), will now likely take place late next year, rather than in the middle of 2020 as previously flagged.
The confirmation was given on a conference call with investment analysts on Tuesday, following the announcement of the firm’s second-quarter earnings results. Galaxy Entertainment reported second-quarter net revenue of HKD13.17 billion (US$1.68 billion), down 5.4 percent year-on-year. The group said a “solid” performance in the mass-market segment was offset by a “challenging” VIP gaming business during the period.
Galaxy Entertainment said previously that Phase 3 would feature 1,500 hotel rooms, some casino space, and a large-scale arena with 16,000 seats. The group has since applied to register as trademarks the names “Galaxy Arena Macau” and “Galaxy International Convention Center”.
The company had also stated previously that Phase 3 would have 400,000 square feet (37,161 sq metres) of space for meetings, incentives, conferences and exhibitions (MICE).
Galaxy Entertainment’s management was quoted in a Tuesday note from brokerage Sanford C. Bernstein Ltd as saying that the 16,000-seat arena and the new MICE facility would open in late 2020 or early 2021. The new 1,500-room hotel tower was now scheduled to open in early 2021, according to Sanford Bernstein’s memo.
Earlier in the day, during a press conference, Galaxy Entertainment’s management had indicated that the pace of construction for Phase 3 of Galaxy Macau was dependent on various government approvals.
Phase 4 of Galaxy Macau has been flagged as having a non-gaming focus and would offer approximately 3,000 hotel rooms. According to Galaxy Entertainment’s management, the company has completed the majority of the piling work for Phase 4, which is now targeted for opening in 2022, according to Sanford Bernstein’s memo. The company had previously mentioned that Phase 4 would open by 2021.
The construction budget for Phase 3 and Phase 4 remains in the range of HKD45 billion to HKD50 billion, as previously announced, said the group’s management quoted by Sanford Bernstein’s note.
Galaxy Entertainment’s current Macau gaming rights are due to expire in June 2022.
The Sanford Bernstein analysts said they were now expecting a first-stage opening of Phase 3 in early 2021. “We expect the opening of Galaxy Macau Phases 3 and 4 to be a positive catalyst for Galaxy Entertainment’s valuation,” they added.
During the conference call with analysts, the casino operator’s management said that the HKD1.5-billion revamp of Galaxy Macau and the StarWorld Hotel on Macau peninsula was expected to be completed in the first half of 2020. The company said in a Tuesday statement that the revamp had caused some “short term disruption” at the two properties.
According to Sanford Bernstein’s memo, Galaxy Entertainment closed two VIP rooms for renovation during the second quarter, “which reduced the [firm's] capacity by 8 percent to 10 percent”.
In its results for the three months ended June 30, Galaxy Entertainment said VIP turnover fell by 37.9 percent year-on-year, to nearly HKD179.67 billion. Aggregate second-quarter VIP revenue was approximately HKD7.33 billion, down 24.8 percent year-on-year, helped by a higher win-rate if 4.1 percent versus 3.4 percent a year earlier.
In Tuesday’s call with analysts, Galaxy Entertainment’s management mentioned a soft start to third-quarter gaming trends, adding that it expected the VIP segment “to remain under pressure,” according to a note from brokerage Jeffries Hong Kong Ltd.
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Vitaly Umansky, Eunice Lee and Kelsey Zhu
Sanford Bernstein analysts