Galaxy strong May break, led by premium mass: analysts
Macau casino operator Galaxy Entertainment Group Ltd saw strong gaming earnings relative to the earlier part of the year, during the five-day holiday encompassing Labour Day on May 1, said brokerages Sanford C Bernstein Ltd, and Jefferies Hong Kong Ltd in respective Thursday memos, citing commentary from the gaming firm’s management.
The improvement was led by premium-mass play, and was accompanied by high levels of hotel occupancy, and strong sales in the luxury retail segment, said the institutions, in notes issued after highlights of Galaxy Entertainment’s first-quarter earnings were filed with the Hong Kong Stock Exchange. The company’s flagship resort is Galaxy Macau, (pictured in a file photo) on Cotai.
The casino firm’s gross gaming revenue (GGR) for the holiday was “approximately 50 percent” of 2019 levels, which was “driven by premium mass that recovered to 60 percent to 70 percent” of 2019-levels, said Sanford Bernstein in its Thursday note. The 2019 holiday as applicable to mainland China, had one fewer day than the 2021 break, according to China’s State Council.
VIP gaming revenue of Galaxy Entertainment during the 2021 holiday was however only “20 percent to 30 percent” of 2019 levels, the brokerage noted.
Average hotel occupancy of Galaxy Entertainment’s hotels for the Labour Day break was over 80 percent, noted separately Sanford Bernstein and Jefferies, citing the company’s management.
In addition, “hotel occupancy and business dropped less than expected post-[Labour Day] holiday week,” wrote Sanford Bernstein analysts Vitaly Umansky, Louis Li, and Kelsey Zhu, referring to Galaxy Entertainment.
Rival Macau operators Sands China Ltd and Wynn Macau Ltd also recently mentioned strong gaming performance and hotel occupancy during the May break, relative to the 2019 holiday.
Jefferies’ analyst Andrew Lee noted in his Thursday memo, that market wide in Macau, there had been signs of a post-holiday lull in gambling volumes.
The institution estimated daily casino GGR across the city had slowed to MOP340 million (US$42.5 million), after the May break, compared to more than MOP600 million daily during the holiday.
Roland To, Galaxy Entertainment’s senior director of strategic planning, noted in comments to Hong Kong media on the sidelines of the firm’s shareholder meeting on Thursday, that the group had seen quieter business following the Labour Day break, with performance “in line with” market-wide levels.
He noted that normally Hong Kong would be a “significant” source of customers for Macau’s gaming and tourism sectors. The easing of current travel restrictions between the two places would be “helpful”, when it happened.
The company’s chairman Lui Che Woo was also cited as saying at the same occasion that the firm was looking to “enhance the standards” of its new facilities at Galaxy Macau casino resort, in order to attract “mass clients”, as China’s authorities sought to “reduce” the scale of VIP play.
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