CASINO

Galaxy Entertainment shakes off Q4 downturn to post annual gain

TAGs: Galaxy Entertainment Group

galaxy-entertainment-francis-lui-revenueMacau casino operator Galaxy Entertainment Group (GEG) shook off a downturn in the second half of 2014 to post improved annual revenue.

GEG’s earnings fell 25% to HKD 2.7b (US $348m) in Q4, reflecting the malaise gripping the broader Macau gaming sector. GEG’s flagship property Galaxy Macau saw earnings fall 19% to HKD 2b as revenue fell 8%. VIP turnover was down 23%, which was better than Macau’s other operators, who have endured falls of up to 44%. Galaxy Macau’s mass market earnings fell 8% but non-gaming revenue rose 17% to HKD 408m.

StarWorld Macau earnings were down 38% to HKD 645m as VIP revenue fell 29%, mass win fell 19% and non-gaming revenue was flat. The City Clubs branded casino business reported earnings of HKD 33m and the construction materials business added HKD 164m.

For the year as a whole, GEG revenue gained 9% to HKD 71.8b while earnings rose 5% to HKD 13.2b and net profit rose 3% to HKD 10.3b.

Galaxy Macau’s annual revenue rose 18% and earnings rose 12%. VIP turnover rose 22% and VIP win rose 20% as hold held steady at 4%. Mass table drop fell 1% but net win rose 16% thanks to hold improving 6.6 points to 44.1%. Electronic gaming handle rose 18% while net win rose 4% to HKD 1.6b.

StarWorld Macau annual revenue fell 4% and earnings were down 6%. VIP turnover fell 6%, mass table drop slipped 2% and slots were off 8%. City Clubs annual earnings fell 8% to HKD 166m.

GEG said Macau was undergoing “one of the most challenging periods” in its history and that all stakeholders needed to “pull together in one direction” to ensure the market fulfilled its “vast economic and social development potential.” That said, the “virtually debt free” GEG is better positioned than most to weather the storm, holding a net cash position of HKD 8.2b.

GALAXY ANXIOUS TO LEARN GAMING TABLE ALLOTMENT
Following the results announcement, GEG vice-chairman Francis Lui (pictured) told reporters that he didn’t feel Macau’s current plight represented “any massive structural problem” and remained convinced that business would pick up in the second half of 2015. As such, GEG “won’t change its long-term business strategy in the midst of business cycles.”

Lui also said that the company had formally submitted its application for gaming tables at Galaxy Macau’s second phase, which will open on May 27. Lui said GEG expects to begin negotiations “soon” with Macau regulators regarding the number of tables the property will receive.

GEG’s phase two has a capacity for up to 500 tables but rumors are rife that the government intends to issue far fewer tables than the companies building new mega-resorts on Cotai had originally envisioned. Lui said GEG would obviously like as many tables as they can get but believes the government’s eventual decision will be “pragmatic” and GEG accepts that “in the current environment, the number of tables cannot grow indefinitely.” However many new tables GEG receives, Lui said the majority will target the mass market.

Earlier in the week, GEG issued another warning about “illegal and unauthorized” websites using GEG’s intellectual property to promote online betting services. GEG issued a similar warning last August and says it will “take legal action” against any individual or entity connected to such “bogus look-alike” sites.

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