GGRAsia – Galaxy third quarter revenue rises by 6 pct y-o-y

Galaxy third quarter revenue rises by 6 pct y-o-y

Nov 11, 2014 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator Galaxy Entertainment Group Ltd on Tuesday published selected highlights from its unaudited third quarter results.

The company said group revenue rose 6 percent year-on-year to HKD17.3 billion (US$2.2 billion). Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 1 percent from the year-prior period, to HKD3.3 billion.

The group also returned capital to shareholders during the quarter, paying a special dividend of HKD0.70 per share on July 31.

Karen Tang of Deutsche Bank AG in Hong Kong said in a note: “Third quarter EBITDA was in line with consensus at HKD3.27 billion, down 5 percent quarter-on-quarter (+1 percent year-on-year). We see this as a set of solid results in a tough VIP [gambling] environment.”

Galaxy Entertainment said that at its flagship Cotai property Galaxy Macau, revenues for the quarter rose 11 percent year-on-year to HKD11.1 billion, while adjusted property EBITDA was up 4 percent to HKD2.4 billion for the period.

At StarWorld Macau (pictured), on Macau peninsula, revenue rose 0.5 percent to HKD5.7 billion, with adjusted property EBITDA down 0.7 percent year-on-year.

Group wide, total mass market gaming revenue increased 12 percent year-on-year to HKD4.8 billion while VIP gaming revenue climbed 5 percent year-on-year to HKD11.8 billion. Electronic games revenue grew 6 percent year-on-year to HKD0.5 billion.

“We are happy to see Galaxy’s mass table revenue +1 percent quarter-on-quarter (outperforming the market’s -1 percent quarter-on-quarter),” wrote Ms Tang.

She added: “The sequential EBITDA decline was due to: i) VIP rolling -13 percent quarter-on-quarter (already better than market -15 percent quarter-on-quarter) and ii) slight margin slip (-10 basis points quarter-on-quarter to 18.9 percent) which we think reflects the additional staff cost announced in early August (stock awards equal to three months salary).”

Union Gaming Research Macau Ltd said in a note, following Galaxy Entertainment’s third quarter earnings conference call on Tuesday afternoon, that the casino operator was continuing to make strong bets in the VIP segment.

Analysts Grant Govertsen and Felicity Chiang wrote: “During the quarter Galaxy again shifted tables from its mass floor and into VIP at Galaxy Macau (approximately 10 percent of its mass market tables). We would expect further shifts towards VIP later in 4Q14 as the company expects to bring two new junket rooms online at the property. This focus on VIP was reflected in 3Q14 numbers with Galaxy’s portfolio wide VIP volume metrics notably outpacing the market (rolling chip volume +4 percent year-on-year versus the market decline of 19 percent)…”

Galaxy Entertainment said in its filing giving selected unaudited results for the third quarter that the HKD19.6 billion Galaxy Macau phase 2 “remains on budget and on schedule to complete [sic] by mid-2015”.

The company added that “site investigation works” for Cotai phases 3 and 4 – a project costed at HKD50-HKD60 billion – were due to commence “shortly”.

The refurbished Grand Waldo complex next door to Galaxy Macau, will relaunch in “early 2015” the filing said, adding that “conceptual plans” would be revealed in January.

Meanwhile the casino company is continuing to develop “conceptual plans” for non-gaming facilities on a 2.7-square kilometre (1-sq. mile) parcel of land at Hengqin Island next door to Macau in mainland China.

The firm said that in international markets it is “continuously exploring opportunities…primarily in Asia.”

Galaxy Entertainment said it remained “well capitalised and liquid” with cash on hand, as at September 30, of HKD11.5 billion.

The company added it was “virtually debt free” with a net cash position of HKD11.2 billion

Outside the reporting period, Galaxy Entertainment paid another special dividend – of HKD0.45 per share or approximately HKD1.9 billion – to shareholders on October 31.