Macau casino operator Galaxy Entertainment’s profit surges 67pc as gaming market recovers
The company is also looking overseas, including Japan and the Philippines, for expansion opportunities
Galaxy Entertainment Group, one of the six major casino operators in Macau, reported better-than-expected earnings for 2017, thanks to rapid growth in its VIP and mass segments amid a gaming market recovery in the city.
Net profit rose 67 per cent to reach HK$10.5 billion (US$1.34 billion) in 2017, compared with 2016, while revenue for the year was also up 18 per cent to HK$62.5 billion. The results beat a Bloomberg consensus estimate of HK$9.64 billion in profit and HK$61.2 billion in revenue by analysts.
The company also saw its adjusted Ebitda increased by 37 per cent on the year to HK$14.1 billion.
“Despite increased competition both in Macau and regionally... we are encouraged to see that Macau is experiencing a continued market recovery,” said the company in a filing to the Hong Kong stock exchange on Wednesday.
“The opening of the Hong Kong-Zhuhai-Macau bridge will significantly improve accessibility for international travellers who arrive by air via Hong Kong,” the statement said.
“In the medium to longer term, tourist markets in mainland China and Asia remain dramatically underpenetrated, offering opportunities for significant growth in tourism, leisure and travel.”
The company said it was also looking for project opportunities in countries including the Philippines and Japan. A premium US$500 million eco-friendly beach resort on Boracay Island is already in the pipeline, a project it is collaborating with the Philippines’ Leisure and Resorts World Corp and announced in December.
Macau has been slowly recovering since August 2016 from a gloomy period that began more than two years earlier when casino takings were severely dented by Chinese President Xi Jinping’s crackdown on corruption. The enclave reported the biggest surge in gaming revenue in four years last month, as family-run visitors flocked back to the island.
Galaxy Entertainment, along with rivals like Wynn Macau, Sands China and MGM China Holdings who used to rely on high rollers, have shifted their focus to the premium mass market – consisting mainly of casual gamblers and families – by strengthening their presence in the more family-friendly Cotai area. MGM China opened in mid-February its first Cotai project, MGM Cotai, levelling up the competition.
Galaxy is owned by Hong Kong gaming magnate and billionaire Lui Che-woo, who has amassed a fortune of US$21.5 billion and is, according to Forbes, Hong Kong’s third-richest man.
Lui controls the casino operator through Hong Kong conglomerate K Wah Group, which owns stakes in Galaxy and property developer K Wah International. His son Francis Lui is Galaxy’s deputy chairman.
What remains at stake now is also how Macau, the world’s largest gaming hub, will handle the licence renewals the six casino operators. MGM China and SJM Holdings’ licences will expire in 2020, while those held by Sands China, Wynn Macau, Galaxy Entertainment and Melco Resorts & Entertainment will end in 2022.
Francis Lui said he was optimistic about securing a renewal in 2022, as Galaxy’s phase three and four development projects would focus on attracting more family clients, in line with the Macau government’s efforts to bolster growth in the non-gaming sector.
Lui expected the first stage of Galaxy’s phase three project to be completed next year.
Galaxy has three properties in Macau: resort Galaxy Macau and its adjoining Broadway Macau on Cotai strip, as well as StarWorld Macau in the city’s Peninsula area.