Galaxy adds mass in fourth quarter

Galaxy adds mass in fourth quarter

Tuesday, March 7, 2017 Posted by Sam Cooke
Profit growth driven by mass market

If mass market gaming is the trend to be following in Macau right now, then Galaxy Entertainment is perhaps the best exponent of what it can do for a company’s bottom line, according to the casino operator’s latest results.

The operator of the Galaxy Macau and Galaxy Starworld said that while full-year revenues increased 4 percent to HK$52.6bn the adjusted EBITDA figure rose 18 percent to HK$10.3bn helped by a 20 percent rise in mass net win for 2016 to HK$14bn.

In words which will likely delight the Chinese authorities, chairman of Galaxy Entertainment Lui Che Woo said the company had worked hard to control costs while substantially growing its mass-market business.

“Our portfolio of luxury hotels were virtually 100 percent occupied during the year and we reported non-gaming revenue of HK$3.2bn an increase of 18 percent year-on-year; this demonstrates our commitment to support the Macau Government’s efforts to diversify the economy and grow non-gaming revenue.”

Analysts at Union Gaming said the company was outpacing the rest of the Macau market in terms of mass growth. “Clearly Galaxy is hitting its stride as it relates to the all-important segment and we expect continued solid mass trends to continue for the company as we look to the rest of 2017 and into 2018,” analyst Grant Govertsen told his clients in a note late last week.

“We believe the company has hit all the right notes as it has not only reconfigured the gaming floors, but also when contemplating a major revamp of food and beverage particularly at Galaxy Macau.”

Galaxy will soon be announcing the next stages of development at its Galaxy Macau property which will see it add more room capacity.

Union’s view – contrary to other analysts in the space – is that the revival in Macau is being driven by mass-market growth. The outlier has been Wynn Macau where VIP growth for the last three months of the year was over 80 percent year-on-year compared to the general market growth of 10 percent. In comparison, Galaxy saw VIP growth of only 4 percent for the fourth quarter. Excluding Wynn from the numbers, mass growth would have been 8 percent versus VIP growth of only 1 percent.

Totally Gaming says: The future of Macau is very much tied to the fortunes of its mass market gaming so the news that, according to Union Gaming, that segment is outpacing VIP revenues will be music to the ears of the Chinese authorities. Eyes now turn to whether the trend is continued into the first quarter where the evidence to date at least is mixed.

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