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.