Macau casino operator Galaxy Entertainment Group (GEG) has bucked the local trend by posting respectable gains in its VIP gambling segment in Q3. Group revenue in the three months ending Sept. 30 rose 6% year-on-year to HKD 17.3b (US $2.23b) and earnings rose 1% to HKD 3.3b.
The numbers are all the more impressive given that Macau is mired in a five-month long revenue slump that has seen other operators report significant drop-offs in VIP gambling revenue and only modest gains in the mass market segment.
In contrast, GEG’s mass market gaming revenue rose 12% to HKD 4.8b while VIP gambling revenue rose 5% to HKD 11.8b. It wasn’t simply a case of a higher win rate, as GEG’s rolling chip volume rose 4% while overall Macau VIP turnover fell 19%. Deutsche Bank’s Karen Tang said GEG had delivered “a set of solid results in a tough VIP environment” while CIMB Securities analyst Michael Ting noted that GEG’s “relationships with the junket operators are quite strong.”
Union Gaming Research Macau noted that GEG had reallocated 10% of its mass market tables to VIP rooms at GEG’s flagship Galaxy Macau property during Q3. The property’s VIP takings were testament to this strategy, rising 12% to HKD 7.2b despite “modest bad luck.” Mass revenue was also up 12% to HKD 3.1b and Galaxy Macau enjoyed a 99% occupancy rate, all of which allowed the property’s earnings to rise 4% to HKD 2.4b.
StarWorld Macau spoiled the party by reporting its “worst VIP luck in history,” yet even this resulted in just a 1% decline in VIP revenue to HKD 4.4b. StarWorld’s mass revenue rose 10% to HKD 1.1b and its occupancy rate was also 99%, but earnings were down 1% to HKD 904m.
Unlike many of its competitors, GEG reported being “virtually debt free” at the end of Q3, holding a net cash position of HKD 11.2b ($1.44b). Galaxy Macau’s Phase 2 is on target for a mid-2015 opening and will offer GEG some badly needed extra hotel room capacity. The revamped Grand Waldo Complex across the street from Galaxy Macau is hoping to re-open early in the new year. GEG chairman Lui Che Woo (pictured) said he remains “very optimistic about Macau’s medium to longer prospects.”