Macau casino operator Galaxy backs Boracay closure despite US$500m resort in the works
Casino operator Galaxy reports jump in earnings and provides updates on plans for resorts in China and Japan
Macau casino operator Galaxy Entertainment Group, which posted a 36 per cent jump in earnings on Thursday, says it supports the Philippines government’s move to temporarily close Boracay for environmental reasons and will seek further clarification after announcing plans for a US$500 million resort on the island.
“We support the Philippine Government’s decision to temporarily close Boracay and their restoration initiative for the island,” it said in a filing to the Hong Kong bourse on Thursday. “We continue to work with our local partner to seek further clarification.”
The company, one of the six listed casino operators in the tiny enclave of Macau, announced in March initial plans to develop a casino-cum-resort with up to 60 tables on the popular holiday island.
Fierce competition has prompted a number of operators in Macau, the only place where its legal to gamble in China, to seek new growth engines, including finding new destinations for casinos in a bid to draw high rollers in this region, many of whom are affluent middle class Chinese gamblers.
However, the Philippines gaming regulator said at the end of April that the resort has been put on hold, and that Galaxy would need to convince President Rodrigo Duterte of its “advantages”, according to Reuters.
Boracay is officially shut for six months for a clean up since April 26 after Duterte called the place a “cesspool”.
In addition to the Boracay resort, Galaxy Entertainment said it was actively pursuing the development of an integrated resort in Japan and has been making progress with its plans for a resort in Hengqin, close to the Chinese city of Zhuhai.
The company, which operates Galaxy Macau, Broadway Macau and StarWorld Macau, accounts for about 21.2 per cent of the general gaming revenue generated in Macau, according to Daiwa Capital Markets.
The company on Thursday also reported a 36 per cent increase in Ebitda to HK$4.3 billion (US$547.7 million) for the first three months this year, while revenue rose 32 per cent to HK$18.5 billion on the back of resurgent demand from high rollers and mass gamblers.
The earnings growth comes close on the heels of a better-than-expected Macau gaming revenues for April. The 28 per cent growth beat analysts conservative estimates of about 20 per cent in April.
Sophie Lin, a Hong Kong-based analyst at the ratings agency S&P Global, said that although industry observers have been worried about the possible effects of China’s policies including caps on capital outflow and ongoing anti corruption campaign on Macau’s high rollers, the city’s gaming business has not been influenced too much by these policies this year.
“We might revise our estimation for Macau’s gaming revenue if this kind of momentum continues into the next few months,” she said.