Gaming | Galaxy earnings decline less than expected on new casinos

Lui Che Woo, chairman and founder of GEG, center, waves as he stands for photographs with Francis Lui, deputy chairman, second right, and Michael Mecca, president, right, during a news conference in Hong Kong

Galaxy Entertainment Group Ltd.’s fourth-quarter earnings fell 7 percent from a year earlier, less than the decline analysts expected, as the opening of new Macau resorts last year boosted its non-gambling sales and casino market share.
Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, was HKD2.5 billion (USD322 million), compared with the HKD2.36 billion median estimate of five analysts surveyed by Bloomberg. That was also more than the HKD2.1 billion earned in the third quarter.
“Profit improvement for Galaxy can be sustained in 2016 because it has among the best non-gaming products in Macau, especially its hotel and retail offerings,” CLSA Ltd. analyst Aaron Fischer said before the results. Galaxy has focused on improving the tourist-oriented Galaxy Macau Phase 2 and Broadway projects since they opened in May, he said.
Macau’s gambling revenue plunged a 20th straight month in January amid China’s economic slowdown and crackdown on corruption, which led high-end VIP gamblers to avoid the world’s largest casino hub. Still, revenue declines in the mass market gambling sector have eased, as operators shifted their focus to draw more tourists.
Galaxy shares have risen 6.5 percent this year through Wednesday, making it the only gainer among Macau casino stocks and the best performer in the Hang Seng Index.
New projects helped Galaxy boost its share of mass market table games revenue to 19 percent in the fourth quarter, up from 16 percent in the second quarter, Deutsche Bank AG analyst Karen Tang wrote in a note dated Jan. 20.
Galaxy is “cautiously optimistic” that the Macau gaming market is stabilizing and “remains confident in the long term potential of China,” it said in a statement yesterday. Its billionaire Chairman Lui Che Woo has said the company will see stable growth as it actively develops the non-gaming business. Daniela Wei, Bloomberg