Macau casino operator Galaxy Entertainment Group (GEG) bucked the trend of its crosstown rivals by posting its first quarterly profit rise since Q3 2014.
GEG has been among the most vocal of the Macau operators that have claimed to see signs of the market’s ‘stabilization’ for going on a year now but GEG’s new Q1 earnings report actually provides quantifiable evidence to support this claim.
GEG’s revenue fell 2% to HKD 13.4b (US $1.72b) in the three months ending March 31, a far less severe plunge than some of its rivals have projected. Moreover, revenue was 1% higher than in Q4 2015. Adjusted earnings rose 6% year-on-year to HKD 2.4b ($309m) thanks to “good luck” at its gaming tables, which helped push earnings up by HKD 100m ($12.9m).
Total gaming revenue was down 5% year-on-year but up 2% sequentially to HKD 12.7b. VIP gambling revenue was up 3% sequentially to HKD 7.2b but down 17% year-on-year due to GEG adjusting its resources to deal with Macau’s shift to a more mass-market focus. That shift is paying off for GEG, as its mass table revenue rose 2% sequentially and 17% year-on-year to HKD 5b.
The mass-market focused Galaxy Macau earned the bulk (HKD 2b) of GEG’s overall earnings. The property’s revenue improved 12% year-on-year thanks to the mid-2015 launch of Phase 2. Non-gaming revenue rose 71% to HKD 666m thanks to a 99% occupancy at its five hotels.
StarWorld Macau experienced a run of bad luck, particularly on the VIP side, that pushed the property’s Q1 revenue down 26% year-on-year to HKD 2.9b. The new family friendly Broadway Macau venue, which lacks any VIP tables, was similarly unlucky, although gaming revenue improved 6% sequentially to HKD 131m.
GEG chairman Lui Che Woo (pictured) offered a qualified thumbs-up to the Q1 numbers, saying they suggested Macau’s gambling market was “potentially stabilizing.” At any rate, GEG had a net cash position of $1b, so even if Lui’s wrong, GEG is well positioned to ride out the lull.
