Casino operator Galaxy Entertainment Group (GEG) reported falling revenue and rising earnings in Q3 as the company continued to play lucky against its VIP gambling customers.
On Thursday, GEG released its financial report card for the three months ending September 30, which saw group revenue fall 2% year-on-year to HK$12.7b (US$1.62b) while adjusted earnings rose 5.6% to HK$4.1b.
GEG is the last of Macau’s six casino concessionaires to deliver its Q3 report and its results largely mirror that of its competitors: VIP down, mass up. In GEG’s case, the company said its customers’ bad luck added around HK$184m to its Q3 earnings.
Gaming’s net contribution to the revenue pie was down 4.2% to HK$10.6b thanks to a 26% plunge in VIP gambling win to HK$6.37b. Things could have been worse, as VIP turnover fell 38% year-on-year, but win rate jumped 0.6 points to 3.9%. That’s not as high as Q2’s 4.1% win rate but still well above the expected range of 2.7-3.0%.
Mass table drop rose a modest 1.6% but win rate rose two points, pushing mass table revenue up 10.7% to HK$7.3b. Electronic gaming volume was off nearly 6% but net win improved 3.2% to HK$641m.
GEG’s flagship Galaxy Macau property bore the brunt of the VIP slowdown, with turnover falling nearly 42% but VIP win came in a 4.4%, unchanged from Q2 but a full point higher from Q3 2018. The casino’s mass table win shot up 15.6% to HK$5.13b, easily eclipsing the VIP segment’s HK$4.8b.
Galaxy Macau’s five hotels boasted “virtually 100%” occupancy in Q3, underscoring the need behind GEG’s Tuesday announcement of a deal with Hyatt Hotels Corp to add an Andaz-branded 700-room hotel to Phase 3 and 4 of Galaxy Macau. The new hotel is expected to open to the public in H1 2021.
Galaxy’s Starworld Macau property reported revenue falling 14% to HK$2.5b, while earnings were off 11% to HK$828m. Starworld’s VIP turnover fell by one-third and VIP revenue slid over 36%, while mass table drop and win were essentially flat. The VIP-free Broadway Macau reported essentially flat revenue of HK$141m.
GEG chairman Lui Che Woo said his company had performed well despite the multiple headwinds currently plaguing Macau’s casino market, including China’s slowing economy thanks to Trump’s trade war, the civil unrest in Hong Kong and increased regional competition.