Galaxy Entertainment swings to HK$1b profit after debt buyback

Casino operator Galaxy Entertainment Group recorded a net profit of HK$1.06 billion in the first half thanks to gains from a debt buyback and cost control, after reporting a loss a year earlier.

Earnings before interest, tax, depreciation and amortisation (ebitda) surged 91 per cent to HK$507 million for the six months to June, compared with HK$242 million the previous year. Ebitda at Galaxy's StarWorld casino rose 45 per cent to HK$419 million.

Revenue dropped 1 per cent to HK$5.34 billion. Revenue from the gaming and entertainment business rose 3 per cent to HK$4.73 billion, but revenue from the construction materials business dropped 24 per cent to HK$608 million.

The company generated a one-off gain of HK$819 million from buying back HK$1.94 billion of debt at about 50 US cents in the dollar.

Revenue at StarWorld increased 15 per cent to HK$4.03 billion, with HK$3.4 billion from VIP gamblers. Mass gaming revenue dropped 14 per cent to HK$440 million. Turnover of slot machines dropped 8.7 per cent to HK$63 million.

Galaxy introduced six more VIP gaming tables at StarWorld in July, while renovation work on the mass gaming floor was completed last month.

The company paid HK$1.1 billion in land premiums for the resort development site in Cotai. The remaining HK$1.7 billion will be paid over four years.

Phase one of the project was scheduled for completion at the end of this year, but construction has been delayed owing to the global financial crisis. Francis Lui Yiu-tung, the vice-chairman of the group, said yesterday that the facade of phase one would be completed at the end of the year.

The company will announce the opening date in the next few months.

'The performance of the gaming business has been stable in the first half, better than the analysts' expectations of a 10 per cent fall,' said Lui.

'The gaming revenue hit a record in August. I think the performance of the gaming business will not be bad in the second half.'

The occupancy rate of StarWorld Hotel was more than 90 per cent in July and August. He said the hotel had been fully booked for the Golden Week national holiday in early October.

No interim dividend was declared.

Shares in Galaxy Entertainment Group dropped 5.21 per cent to close at HK$3.46 yesterday.

They have more than tripled this year amid expectations that travel curbs on mainlanders visiting Macau will be relaxed.

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Revenue from gaming and entertainment business increases 3pc

Galaxy's ebitda for the six months was HK$507 million, a surge of: 91%