Galaxy Macau casino bets reap big payout
Galaxy Entertainment has kicked off work on the extension of its Cotai Strip casino resort in Macau with expectations the 2,200-room property, which opened in May last year, will return its investment in less than four years.
That will make it one of the highest-margin casinos in the world.
The casino developer yesterday reported net profit soared 234 per cent to HK$3 billion last year from HK$898.5 million in 2010.
Directors did not recommend a dividend despite the company having HK$7.7 billion in cash. They said it was better to reinvest the profit on the expansion of Galaxy Macau rather than distributing it.
The company has a land bank that could eventually yield 55 million square feet of floor area, equivalent to three Galaxy Macaus.
Galaxy Macau has proven to be a cash cow since its opening in May. In the 71/2 months of operation, revenue reached HK$16.4 billion, of which about HK$12.2 billion came from VIP tables and HK$ 2.8 billion from mass gaming.
The occupancy rate of the hotel stood at 90 per cent in December alone. Revenue from hotel-related services amounted to HK$697 million.
The better than expected performance of the new flagship property in the fourth quarter saw annualised return on investment reach 29 per cent. It means the multibillion investment could be paid back in four years.
Lui Che-woo, the chairman of the company, declined to disclose details of the expansion project including the number of gaming tables and amount of investment in the new phase.
'The new phase will be something innovative and highlight the characteristics of Macau,' Lui said.
StarWorld Hotel & Casino, which is also run by the company, reported a 36 per cent year-on-year growth in revenue to HK$22.5 billion and 45 per cent jump in operating profit to HK$3 billion. VIP gaming contributed HK$20.2 billion to revenue on VIP rolling chip volume of HK$664 billion.
Hotel revenue grew 14 per cent to HK$360 million on an average 98 per cent room occupancy rate.
Macau gaming companies have been posting stellar growth for the past several years. However, there were concerns there would be a slowdown this year.
Gaming revenue in the first two months has helped sooth some of the worries.
Despite the Lunar New Year holiday falling in January, February recorded solid gains, with revenue rising 22 per cent year on year to 24.3 billion patacas. Year to date, gaming revenue grew 28 per cent.
Galaxy's casino market share dropped to third at 17.3 per cent while Sands China took second place with 18.9 per cent, suggesting that most of the market gain for Sands came at the expense of Galaxy, a Nomura report said.
The Macau gaming market grew strongly last year, by 42 per cent to HK$260 billion.
Shares in Galaxy dropped 0.84 per cent to close at HK$18.86 yesterday.
The amount of revenue Galaxy Entertainment recorded for last year, in HK$