Revenue during the three months ending Sept. 30 came to HKD12.3b (US $1.59b), down 29% year-on-year but up 5% sequentially, while adjusted earnings fell 36% to HKD2.1b ($271m), slightly above analysts’ forecasts. Earnings would have been around HKD131m higher had the gaming tables at all three GEG properties not “played unlucky” during the quarter.
While GEG trimmed its debt from HKD4.8b to HKD1.2b by the end of Q3, GEG is keeping a sharp eye on its bottom line by launching a cost control program that will save the company HKD800m. Details were scant but GEG said it was “focused on moving all of our operations up the efficiency curve as rapidly as possible” to deal with the Macau market’s “challenging conditions.”
The May opening of Phase 2 of GEG’s flagship property Galaxy Macau helped push non-gaming revenue up 92% year-on-year to HKD 742m, with hotel occupancy at 99%. But the property’s overall revenue of HKD8.7b mirrored the larger numbers, rising 9% sequentially, falling 22% year-on-year.
Reflecting the Macau market’s overall trends, Galaxy Macau’s VIP revenue was down 38% year-on-year and down 4% from Q2. The mass market fared far better, falling only 2% year-on-year while rising 21% from Q2, figures that UBS analysts called “a positive surprise.” Electronic gaming was also a star, with handle up 23% year-on-year and net win up 5%.
GEG said it continues to “actively manage its business … consistent with the evolving Macau market trends toward mass.” GEG says the mass contribution to its overall revenue mix had risen from one-third in Q3 2014 to around one-half in the current quarter.
Despite being the Macau VIP market leader, the “vast majority” of GEG’s earnings now come from mass, slots and non-gaming. Deutsche Bank AG says Galaxy’s share of Macau’s overall VIP market rose 2.6 points to 26.1% in Q3, while its mass market share improved 1.6 points to 18.1%.
StarWorld Macau’s numbers were all in the red, with total revenue down 48% to HKD2.9b, VIP revenue off 59% and mass win down 5%. On a sequential basis, the numbers were slightly better but still broadly negative, with the exception of a 12% rise in mass revenue.
The new Broadway Macau reported total revenue of HKD189m in its first full quarter of operation, with around one-third of that sum coming from non-gaming amenities. Despite the aforementioned bad luck at its gaming tables, the property “virtually broke even” with an earnings loss of just HKD1m.