Galaxy Quarterly Profit Rises 46% on Chinese Casino Spending
Galaxy Entertainment Group Ltd. (27), the casino operator founded by billionaire Lui Che-Woo, posted a 46 percent gain in third-quarter profit as Chinese gamblers spent more at the resort it set up last year. The stock rose.
Adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, increased to HK$2.6 billion ($335 million), Hong Kong-based Galaxy said in a statement today. It didn’t provide net income figures or a year-earlier comparison.
Galaxy shares climbed 3.6 percent to close at HK$25.95 after the results. Macau casino operators have benefited from increased spending by middle-class Chinese tourists, with Deutsche Bank AG estimating third-quarter revenue from the so- called mass market rose 27 percent industrywide in the world’s largest gambling hub.
“We still expect to see significant growth in the future” for the mass market, Galaxy Chief Financial Officer Robert Drake said in a telephone interview today. The completion of the Guangzhou-Zhuhai railway line in China will bring in more mainland Chinese tourists to Macau when it’s completed next year, he said.
Galaxy’s third-quarter revenue rose 6 percent from a year earlier to HK$14 billion.
Construction of phase two of the Galaxy Macau resort, opened in May 2011 on the city’s Cotai strip, is on schedule to be completed in 2015, it said today. The casino operator is investing about HK$16 billion to almost double the size of that gambling center as it competes with companies including Sands China Ltd. (1928), Wynn Macau Ltd. (1128) and Melco Crown Entertainment Ltd. (6883)
The planned expansion of Galaxy Macau will add as many as 500 gaming tables, luxury stores and 1,300 rooms from the JW Marriott and the Ritz-Carlton hotels.
Galaxy Macau’s VIP gaming revenue fell 7.1 percent from the second quarter to HK$173.3 billion, while that for the mass market increased 4.2 percent to HK$6.3 billion, according to today’s statement.
“In today’s global macroeconomic environment, it’s only natural for them to pause,” Drake said, referring to the VIP market revenue. “It will resume growth in the near future.”
Wynn Macau, the Hong Kong-listed unit of Wynn Resorts Ltd. (WYNN), reported yesterday that adjusted Macau property earnings before interest, taxes, depreciation and amortization fell 1.3 percent to $292.2 million in the third quarter.
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