Galaxy Entertainment Group says it has taken the worst Macau can throw at it

galaxy-entertainment-lui-che-wooMacau casino operator Galaxy Entertainment Group (GEG) says it withstood Macau’s best shot and finished 2015 on a positive note.

On Thursday, GEG turned in its Q4 earnings report, which showed revenue falling 20% to HKD 13.3b (US $1.7b) and earnings down 7% to HKD 2.5b in the three months ending Dec. 31. However, those numbers were up 8% and 18% respectively from Q3, leaving the company “cautiously optimistic” that Macau has turned a corner.

For 2015 as a whole, revenue was off 29% to HKD 51b, earnings were down 24% to HKD 8.7b and net profit fell 60% to HKD 4.2b (counting HKD 1.2b of non-recurring charges). GEG “experienced bad luck” in its gaming operations, as VIP revenue fell 43% to HKD 28.9b and mass market table revenue fell 6% to HKD 17.7b.

GEG chairman Lui Che Woo (pictured) said the “credible” results were all the more incredible given Macau’s 20-months-and-counting revenue doldrums. Lui said GEG had enjoyed “healthy” visitor numbers over the Lunar New Year period, which “potentially signal market stabilization.”

Group-wide, VIP gaming revenue fell 37% to HKD 7b in Q4. The decline was much the same at GEG’s flagship Galaxy Macau property, which saw VIP turnover fall 32%. However, VIP turnover was up 10% from Q3 and net win was up 16% as the company “played lucky” with a VIP win of 3.8%, well above the theoretical win range of 2.7–3.0%.

Galaxy Macau’s mass market tables fared better, with table drop up 16% year-on-year and net win up 19% to HKD 3.2b. Slots win rose 30% to HKD 468m and non-gaming revenue improved 82% to HKD 742m thanks to the addition of two new hotels and greatly expanded retail, dining and leisure options following last May’s opening of the property’s Phase 2.

As for GEG’s other properties, StarWorld Macau suffered from the venue’s ongoing transition to a more mass-centric business, as VIP turnover fell 55% while mass table drop was up 19%, StarWorld’s mass revenue grew in every quarter last year, and hopes are high that this trend will continue.

GEG’s new Broadway Macau property has no VIP facilities, and its gaming operations “experienced bad luck” in the seven months it was open in 2015, leaving mass tables and slots win flat from Q3’s numbers.

CLSA analyst Aaron Fischer said GEG was likely to boast improved profits in 2016 “because it has among the best non-gaming products in Macau, especially its hotel and retail offerings.”

Lui announced a special dividend of $0.15 per share to demonstrate GEG’s confidence in its strategy as well as the future of the Macau market.