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Galaxy Entertainment Group posts record earnings on mass market gains

TAGs: earnings reports, Galaxy Entertainment Group, Galaxy Macau, Macau, mass market, Starworld Casino

galaxy-entertainment-macauMacau casino operator Galaxy Entertainment Group (GEG) reported a 3% rise in Q2 revenue to HKD 15.66b (US $2.02b) while earnings rose 18% year-on-year to a record HKD 3.02b ($389.4m). Over the first six months of 2013, GEG saw revenue rise 9% to HKD 30.8b and earnings up 23% to HKD 5.8b. Chairman Lui Che Woo said he was very pleased by GEG’s quarterly accomplishments, which included the HKD 3.25b acquisition of the Grand Waldo Complex on Cotai in May and GEG being added to Hong Kong’s benchmark Hang Seng Index on June 17.

GEG’s flagship property Galaxy Macau saw Q2 revenue up 5% year-on-year to HKD 9.2b, thanks to significant gains in mass market revenue. Mass gaming was up 12% sequentially and 48% year-on-year to HKD 2.54b, due in part to an impressive 37.1% hold rate (vs. 28.4% last year). VIP gaming was up a more modest 1% sequentially and actually fell 5% year-on-year to HKD 5.96b. Slots rose 7% sequentially and 41% year-on-year to HKD 383m, while non-gaming revenue was down 8% from Q2 2012. Galaxy Macau’s overall earnings rose 8% sequentially and 34% year-on-year to HKD 2.1b, its eighth successive quarter of revenue growth.

StarWorld Macau revenue was flat year-on-year at HKD 5.8b as VIP gaming fell 6%, slots fell 20% and non-gaming revenue fell 23%. Once again, mass market gaming rode to the rescue with a 57% rise in Q2 revenue thanks to a 32.2% hold (vs. 22.5% in Q2 2012), but it wasn’t enough to prevent a 2% drop in StarWorld’s overall earnings to HKD 885m. The casinos operating under GEG’s City Clubs brand saw earnings rise 23% to HKD 48m.

Looking ahead, Lui said GEG’s prospects were “encouraging” for “the remainder of 2013 and beyond.” GEG expects to add 12 more VIP gaming tables to Galaxy Macau by October, part of the allotment of 50 tables GEG received from Macau regulators earlier this year. Deputy chairman Francis Lui told reporters he didn’t anticipate VIP spending to suffer any dramatic fall for at least the rest of 2013.

As for Phase 2 of Galaxy Macau, GEG says construction of the 450k-square-metre project remains on budget and on schedule for a mid-2015 opening. Planning for Phases 3 and 4 is nearly in the bag and construction is expected to commence by the end of this year or early in 2014. The relaunch of the Grand Waldo Casino isn’t expected for another six to nine months.

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