Galaxy Entertainment reports 2016 net profit of HK$6.3b, up 51 pc on growth in mass market play and non-gaming business
Galaxy Entertainment, the Macau casino operator chaired by tycoon Lui Che-woo, said net profit for 2016 jumped 51 per cent to HK$6.3 billion (US$811.71 million), beating analysts estimates, thanks to rising contributions from mass market gamblers and non-gaming business.
The company plans an expansion to Japan by cooperating with local players, and expects Macau to record “high single to double digit” growth in gaming revenue in 2017 thanks to an industry recovery.
Galaxy’s net profit compares to analysts expectations of HK$6.04 billion, according to a poll by Reuters.
Adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda), a key measure in the heavy-asset gaming sector, surged 18 per cent year on year to HK$10.3 billion, also beating analysts expectations of HK$10.01 billion.
In the fourth quarter, Ebitda jumped 20 per cent year on year to HK$3 billion, the best quarterly result in over two years, deputy chairman Francis Lui said.
The company declared a special dividend of 26 Hong Kong cents per share payable on April 28, compared with 15 HK cents a year earlier.
Galaxy’s total revenue rose 4 per cent to HK$52.8 billion in 2016. Total mass table revenue went up 19 per cent to HK$21 billion, offsetting an 8 per cent year on year drop in market revenue from VIP play, or junket operators, which amounted to HK$26.5 billion. Non-gaming revenue surged 18 per cent year on year to HK$3.2 billion.
The industrial recovery will continue in 2017, chairman Lui said.
“We like Galaxy for its VIP exposure and defensive performance in the premium mass segment. Galaxy also has the best long-term growth prospects [among casino operators] with Phase 3, 4 and Hengqin in the pipeline,” analysts at The Hongkong and Shanghai Banking Corporation Limited, led by Charlene Liu, said in a report before the results announcement.
Galaxy said it will reveal more details of its development in Hengqin.
Macau’s gross gaming revenue in January rose 3.1 per cent year on year to 19.3 billion patacas (US$2.41 billion), extending the rising streak to a sixth straight month, Macau’s Gaming Inspection and Coordination Bureau announced earlier this month. The monthly data missed analysts estimates of 20.3 billion patacas.
January data was disrupted by the early Lunar New Year, which will be reflected in February, Francis Lui said, expecting the city’s full-year gross gaming revenue to post high-single digit to double-digit growth in 2017 thanks to a gradual pick-up of the mass market.
Galaxy is looking for business opportunities in Japan and plans to join forces with local partners, chairman Lui said. The Japanese parliament passed a bill legalising casinos in December. Limited forms of gambling are currently permitted in Japan, including betting on horses, boats and bicycle racing, in addition to pachinko parlours.
“We have a relationship with Japan’s industrial players for over 50 years...we will seek cooperation opportunity and do a big project,” chairman Lui said.
Elsewhere, Galaxy’s peer SJM Holdings, chaired by Stanley Ho Hung-sun, reported Ebitda of HK$3.4 billion, an 11.5 per cent year on year drop. Net profit fell 5.6 per cent to HK$2.3 billion.
SJM proposed a final dividend of 18 HK cents. SJM’s total dividend for the year, when counting a 6 HK cent interim dividend, amounted to 24 HK cents, compared to 25 HK cents a year earlier.
Galaxy shares ended 0.3 per cent higher at HK$37.2, while SJM tacked on 0.2 per cent to close at HK$6.37. Both companies announced their results after the close of regular trading.