Macau casino operator Galaxy Entertainment Group Ltd produced third-quarter revenue of HKD15.9 billion (US$2.04 billion), up 23 percent year-on-year and up 10 percent quarter-on-quarter, according to unaudited highlights of its performance for the period, filed with the Hong Kong Stock Exchange on Thursday.
The document said group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were HKD3.5 billion, up 31 percent year-on-year and up 7 percent quarter-on-quarter.
“During third quarter 2017, Galaxy Entertainment experienced bad luck in its gaming operation which decreased its adjusted EBITDA by approximately HKD110 million,” said the firm in commentary on the numbers.
The latest filing gave little information on the progress for construction of Phases 3 and 4 of its flagship Cotai resort Galaxy Macau (pictured). In previous results it had mentioned ground exploration work.
In the third quarter highlights it stated: “We continue to move forward with our plans for Phases 3 and 4, and we look forward to formally announcing our development plans in the future.”
It also gave little information on plans for non-gaming facilities on neighbouring Hengqin Island, part of mainland China. “We continue to make progress with our concept plan for our Hengqin project,” stated the company.
The group’s balance sheet remained “liquid and healthy”, the firm added. It said that as of September 30, group cash and liquid investments were HKD36.3 billion and net cash was HKD28.5 billion. Total debt was HKD7.8 billion, up 20 percent quarter-on-quarter compared to the HKD6.5 billion in debt booked as of June 30.
“Our debt primarily reflects a treasury management exercise where interest income on cash holdings exceeds corresponding borrowing costs,” said the firm in its commentary.
“Our strong balance sheet combined with substantial cash flow from operations allows us to return capital to shareholders via dividends and to fund our development pipeline and international expansion ambitions,” added the firm.
Galaxy Entertainment paid a previously-announced special dividend of HKD0.33 per share on October 27, which it said represented an 83 percent increase compared to a dividend paid in October 2016.
The group reiterated in its filing that it and Monaco casino operator Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco – known as Monte-Carlo SBM – continued a partnership, including a commitment “to work together on the development and operation of entertainment businesses including integrated resort projects in the Asia Pacific region, including opportunities in Japan.”
Galaxy Entertainment has been an equity investor in Monte-Carlo SBM since July 2015.
The Macau operator said that during the third quarter, Galaxy Macau generated revenue of HKD11.3 billion, up 20 percent year-on-year, up 15 percent quarter-on-quarter. The property’s adjusted EBITDA was HKD2.7 billion, up 23 percent year-on-year and up 9 percent quarter-on-quarter.
The firm said VIP rolling chip volume at the property for the third quarter was HKD164.9 billion, up 41 percent year-on-year and 24 percent quarter-on-quarter. That translated into revenue of HKD5.9 billion, up 27 percent year-on-year and up 21 percent quarter-on-quarter.
Mass gaming revenue for the venue was HKD4.2 billion, up 17 percent year-on-year and up 8 percent quarter-on-quarter. Electronic gaming revenue at Galaxy Macau for the period was HKD482 million, up 5 percent year-on-year and up 10 percent quarter-on-quarter.
Non-gaming revenue at the venue was HKD773 million, up 2 percent year-on-year and up 8 percent quarter-on-quarter. Galaxy Entertainment said aggregate occupancy at the resort’s five hotels was 98 percent for the quarter.
Net rental revenue from its Promenade shopping mall at Galaxy Macau was HKD222 million, up 11 percent year-on-year and up 5 percent quarter-on-quarter.
At the group’s StarWorld Macau property on Macau peninsula, revenue was HKD3.8 billion, up 36 percent year-on-year and up 5 percent quarter-on-quarter.
Adjusted EBITDA was HKD799 million, up 49 percent year-on-year and up 4 percent quarter-on-quarter. The group said the number had benefited from “good luck” in the venue’s gaming operations.
StarWorld’s VIP rolling chip volume for the third quarter was HKD66.9 billion, up 35 percent year-on-year and up 7 percent quarter-on-quarter. This translated into revenue of HKD2.3 billion, up 62 percent year-on-year and up 9 percent quarter-on-quarter.
Mass gaming revenue at StarWorld was HKD1.4 billion, up 10 percent year-on-year and flat judged quarter-on-quarter. Electronic gaming revenue at the peninsula property was HKD41 million, up 64 percent year-on-year and up 14 percent quarter-on-quarter.
StarWorld’s non-gaming revenue for the quarter was HKD51 million, up 4 percent year-on-year and up 2 percent quarter-on-quarter. Hotel room occupancy was 99 percent for the period, the group said.
At the group’s Broadway Macau property on Cotai – which operates without VIP play – adjusted EBITDA went negative, to a loss of HKD4 million, compared to earnings of HKD7 million in the prior-year quarter. The property was temporarily closed for a month following Typhoon Hato for repairs. The storm struck the city on August 23 with wind speeds of 200 kilometres per hour (124 mph).
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings