Recreational bettors and tourists, coupled with good luck, pushed Galaxy Entertainment Group Ltd.’s (GEG) profit higher in the third quarter of 2016.
GEG’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 28 percent to HK$2.7 billion ($348 million) in the July to September 2016 period from a year earlier, the company said in a filing before the HongKong Stock Exchange.
The company credited “good luck” for posting an increased adjusted EBITDA, which grew by HK$240 million (US$30.94 million).
Much of GEG’s revenue, according to the casino operator, came from Galaxy Macau. During Q3 2016, Galaxy saw its revenue rise by 8 percent year-on-year to HK$9.4 billion (US$1.21 billion) while its adjusted EBITDA was up 31 percent year-on-year to HK$2.2 billion (US$283.66 million).
Dr. Lui Che Woo, Chairman of GEG, said the mass market has fueled their profit for the third quarter, surging by 19 percent year-on-year to HK$3.6 billion (US$464.17 million). In contrast, Galaxy’s main VIP business slumped 4 percent in the third quarter.
“Macau continues to transition to the Mass market and GEG continues to align our business with the direction of the market and allocate resources to their highest and best use. We are encouraged by the continuing signs of market stabilization, yet it remains too early to call the bottom of market,” Woo said in a statement. “Underlying visitor demand remains solid with GEG’s hotels remaining virtually fully occupied during the period. The opening of additional hotel rooms and resort related amenities at Galaxy Macau Phase 2 and Broadway Macau in 2015 saw an increase in the number of visitors who stayed overnight. Importantly, visitors whom stay overnight generally have a higher spend per customer, with a particular focus on higher margin, non-gaming spend.”
Early this month, the Government Tourist Office says total Golden Week visitation to Macau came to 1.07m, up 2.7% from last year. Mainland Chinese visitors accounted for 85% (907k) of total visitation, up 7.1% year-on-year, although this pales to the 17% growth in mainland visitation reported last year.
“Mass market showed strong growth at Galaxy Macau, which was well in excess of the market,” Union Gaming Group LLC gaming analyst Grant Govertsen said. “Galaxy is outperforming the market despite the addition of new supply during the quarter.”