Galaxy Entertainment Profit Rises on Higher Spending
Galaxy Entertainment Group Ltd. (27), the Macau casino operator that made Lui Che-woo Asia’s second-richest person, said third-quarter profit jumped 24 percent as Chinese visitors spent more at its two main casinos.
Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, increased to HK$3.2 billion ($413 million) for the three months ended September, compared with the HK$3.11 billion average estimate from seven analysts compiled by Bloomberg, the company said in a filing to Hong Kong’s stock exchange today.
An improved rail connection, increased hotel supply and new attractions are drawing more mainland Chinese visitors to Macau, the only place in China where casino gambling is legal. Galaxy is expanding in Macau’s Cotai area, the city’s answer to the Las Vegas Strip, to compete with rivals including Sands China Ltd. (1928), whose profit rose 62 percent in the same quarter.
Galaxy Entertainment owns the largest undeveloped landbank in Macau, according to DS Kim, a Hong Kong-based analyst at BNP Paribas. The landbank “would enable the company to quadruple its footprint with Galaxy Macau expansions,” he said.
Galaxy rose 0.4 percent to HK$57.8 at mid-day break in Hong Kong trading. The stock has risen 90 percent this year, beating the 1 percent gain from the benchmark Hang Seng Index.
Group revenue rose 16 percent to HK$16.3 billion. VIP turnover, or bets by high-stakes gamblers, at Galaxy Macau, the company’s flagship casino, climbed 10 percent to HK$191 billion while mass-gaming revenue jumped 11 percent to HK$7 billion.
VIP turnover at StarWorld Macau, another flagship casino, rose 15 percent and mass-gaming revenue climbed 8 percent.
VIPs account for about two-thirds of the casino revenue that flows into Macau, the world’s largest gambling hub. They typically play for high stakes and are brought in by junkets who take commissions from casinos.
Lui, who has a net worth of $21.7 billion, is Asia’s second-richest man after Hong Kong tycoon Li Ka-shing, according to the Bloomberg Billionaires Index.
The Hong Kong-based company in July completed the HK$3.25 billion purchase of the Grand Waldo complex in Macau, which includes a spa and hotel, to increase its presence in Cotai. The company said in August that it will take six to nine months to relaunch the Grand Waldo casino, which is adjacent to Galaxy Macau.
The phase-two expansion at the existing Galaxy Macau resort, will add as many as 500 gaming tables and 1,300 rooms from the JW Marriott and Ritz-Carlton hotels by mid-2015.
Galaxy plans to spend as much as HK$60 billion to begin the third and fourth phases of the project as early as the end of this year and begin operations from 2016 through 2018.
Casino revenue in Macau jumped 32 percent to a record 36.5 billion patacas ($4.6 billion) in October, boosted by mainland Chinese visitors who spent their weeklong National Day holidays in the city.
Gambling revenue in Macau increased 18 percent to 297.1 billion patacas in the first 10 months of this year, close to the $38 billion revenue raked in last year.
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