Gaming tycoon Lui Che-woo says ‘worst is over’ after Galaxy Entertainment profit falls 60 per cent
Revenue drops 29 per cent to HK$51 billion
Galaxy Entertainment chairman Lui Che-woo says the worst is over for Macau’s struggling gaming market after visitor numbers and spending fervour picked up during the Lunar New Year.
“I believe the market will stop falling this year,” the Hong Kong tycoon told a press conference yesterday.
His son Francis Lui, the company’s deputy chairman, said: “The Lunar New Year visitation peak lasted longer than previous years ... that I think is positive signal for Macau GGR (gross gaming revenue).”
Galaxy reported a 60 per cent slump in profit for last year, which it described as “one of the most challenging” for Macau’s entertainment sector. Net profit attributable to shareholders fell from HK$10.4 billion to HK$4.2 billion on a 29 per cent fall in revenue to HK$51 billion. Fourth-quarter earnings before tax, interest, depreciation and amortisation rose 18 per cent from the previous quarter to HK$2.5 billion, but were still down 7 per cent year on year.
Mainland China’s graft crackdown and macroeconomic headwinds have forced Macau’s casino operators to delay new projects and try to lure middle class mainland visitors instead of VIPs.
Galaxy, one of the six gaming concessionaires in Macau, said it generated the “vast majority” of last year’s income from the more profitable non-VIP market, where guests tended to stay longer. “Since the ‘New Normal’, the customer base shifted [to the mass market]”, Francis Lui said.
Company president Michael Mecca said: “We see Macau as truly a proposition for families now.”
Broadway Macau, Galaxy’s new family-friendly casino resort which opened last year, posted a loss of HK$7 million, which Francis Lui said was “acceptable”, while stopping short of predicting a profit this year.
Galaxy said it had managed to achieve HK$500 million in cost savings last year, with another HK$300 million planned for this year.
Competitor MGM said last week that it was postponing the opening of its resort in Cotai from late this year to 2017. Galaxy, which has the largest land bank in Macau, said that site investigation works for its delayed Cotai Phases 3 and 4 were expected to commence this year. Francis Lui provided no time frame for when the company plans to develop a 2.7 square kilometre land parcel it holds in Hengqin, Zhuhai, into a resort.
“As we look ahead, we are cautiously optimistic about the outlook for Macau and the market in the medium to long term, while acknowledging that challenges in macroeconomic and political conditions could lead to continuing volatility in the short term,” Lui Che-woo said.
The company announced a special dividend of 15 HK cents a share payable towards the end of April.