Macau casino operator Galaxy Entertainment Group (GEG) posted record high revenue and earnings in Q3 thanks to strong performances in both its VIP and mass market gaming sectors. Group revenue rose 16% to HKD16.3b (US $2.1b), while earnings rose 24% to HKD3.2b ($413m). As of Sept. 30, GEG had HKD14.4b ($1.85b) cash on hand, half of which is net cash.
This net cash haul is all the more impressive given that GEG prepaid HKD3.5b of debt in Q3, which reduced its borrowings to HKD6.7b, and GEG intends to prepay a further HKD2.9b of debt in Q4, further reducing its debt to HKD3.8b. Somewhere, the tears of a Caesars Entertainment executive are dripping down onto his computer keyboard, that is, if the company hasn’t pawned all its computers in a bid to pay down its own $23.8b debt.
Revenue at GEG’s flagship property Galaxy Macau was up 20% to HKD10b, while earnings rose 31% to HKD2.3b, the property’s ninth consecutive quarter of earnings growth. VIP gaming turnover rose 10% and net win rose 13% to HKD6.5b, thanks to a healthy 3.4% win rate. Mass gaming table drop rose 11% to HKD7b, 45% of which went into Galaxy Macau’s pocket thanks to a 38.9% win rate. Slots handle was up 57%, pushing net win up 28% to HKD402m. Non-gaming revenue was flat year-on-year, but up 12% sequentially to HKD376m.
StarWorld Macau’s earnings rose 8% to a record high HKD910m. VIP turnover rose 15%, but net win grew just 2% to HKD4.5b as win rate slipped 0.3 points to 2.7%. Over at the mass tables, win rate rose 3.2 points to 35.4%, helping push net win up 64% to HKD1b, another record. StarWorld’s slots had an off quarter, with net win falling 25% to HKD44m.
Looking ahead, GEG says its prospects for the rest of 2013 and beyond are so bright they have to wear shades. Plans for Galaxy Macau’s Phase 2 remain on budget and on schedule for a mid-2015 opening. Construction on Phases 3 & 4, which will double Galaxy Macau’s footprint once they’re completed, is expected to commence early next year. Renovation work continues on the Grand Waldo Complex, which the company acquired earlier this year. GEG says the Grand Waldo is “strategically important” to its development pipeline and hopes to be able to share its full plans for the facility early next year.
