Galaxy beats profit estimates as Macau shifts from just high-rollers
Lui Che-woo’s gambling giant delivers 13 per cent rise in half-year earnings to HK$4.7 billion, on revenue of HK$25.5 billion
Billionaire casino mogul Lui Che-woo said Macau, the world’s gambling hub, has successfully transformed itself to a top tourist destination, after his casino operator Galaxy Entertainment posted better-than-expected net income for the first half of the year.
“Macau’s gaming sector has hit the rock bottom and a rebound is already on the horizon,”the 87-year-old told reporters in Hong Kong on Thursday.
And the gaming giant’s upcoming Galaxy Macau Phase Three and Four projects might feature more technology-related elements to bolster the appetite of visitors, revealed his eldest son, deputy chairman Francis Lui Yiu-tung.
The Hong Kong-listed operator of the Galaxy Macau casino resort saw its adjusted earnings before interest, taxes, depreciation and amortisation jump 13 per cent to HK$4.7 billion, beating analyst consensus estimates of HK$4.5 billion in a poll by the Post.
Total revenue in the first six months was HK$25.5 billion, marginally up on HK$25.4 billion in the same period in 2015.
The upbeat earnings of the mass-market-focused gaming giant came after the government of the former Portuguese colony urged the city’s casinos to map out more non-gaming attractions as China’s big-spending VIP patronage shunned Macau following a graft crackdown by Beijing.
“The first half of 2016 was encouraging for Macau and we continued to see gradual signs of stabilisation, as it diversifies, and the shift towards mass segment continues,” the company said in a statement.
“While we do acknowledge there might be increased competition with the opening of additional properties in Cotai, we are hopeful that the new properties will also be a catalyst for increased visitation and increased length of visitor stay.”
Galaxy Entertainment shares rose 2.13 per cent by Thursday’s close to HK$26.35. The company announced a special dividend of 14 HK cents.
Galaxy Entertainment, which relies more on its retail and hotel offerings than most of its rivals, has been making a big effort to attract larger-spending tourists and recreational gamblers to its Galaxy Macau Phase 2 and Broadway Macau projects, with promotional campaigns and family-friendly facilities.
Revenue generated from VIP-room gambling tables slumped 15 per cent year on year to HK$13.2 billion, while main-floor tables netted HK$10 billion in revenue, up 22 per cent from a year ago.
“Its mass-market positioning tends to meet the government’s expectations in the long run ... while it is likely to face more competition in the second half with the openings of Wynn Palace and The Parisian,” Aaron Fischer, head of consumer and gaming research at CLSA, told the Post ahead of the earnings announcement.
He reckoned that Sands China’s The Parisian resort, set to welcome its first visitors in September, could carve out a bigger share in the mass-market segment with its additional supply of 3,000 hotel rooms, while the Wynn Macau’s deluxe Wynn Palace would be popular among premium-mass gamblers.
The company said the site preparation works for the third and fourth phases of its resorts could start in late 2016 and in 2017 respectively.
More than 95 per cent of the total floor area at Galaxy Macau will be devoted to non-gambling amenities, but it is widely believed among market watchers that gaming still delivers the juiciest returns for casino operators.
Macau’s gaming revenue has contracted between 10 and 20 per cent every quarter for two years, as a slowing Chinese economy combined with a government campaign to root out corruption scared off high-stakes gamblers from the mainland.