Gaming operator Galaxy Entertainment Group Ltd. saw its net profit attributable to shareholders soar by 51 per cent year-on-year to HK$6.3 billion (US$784.4 million) for the whole year of 2016 while total gaming revenue went up by 2 per cent year-on-year to HK$49.5 billion.
The group’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 18 per cent year-on-year to HK$10.3 billion and total revenue amounted to HK$52.8 billion, a year-on-year growth of 4 per cent.
“We have delivered very credible and solid results given the challenging operating environment that we experienced for the majority of 2016,” chairman Lui Che Woo said during the group’s financial results presentation in Hong Kong yesterday. The gaming boss added that the city’s gaming market has stabilised since last year and is showing “positive developments”.
In its results, the group stated its “solid results” for the year was driven by its focus ‘to drive profitable volumes and actively control costs’.
The company’s gaming revenue derived from the mass market jumped by 19 per cent year-on-year to HK$21 billion for the year as total VIP revenue declined by 8 per cent year-on-year to HK$26.5 billion.
Nevertheless, deputy chairman of the group, Francis Lui Yiu Tung, perceives the city’s further regulations of increasing the transparency of junket operations would help the sector bounce back.
“Less stable junkets have been removed,” he said. “And as the entire VIP system in Macau becomes more clear and more orderly; we believe VIP will get back on track.”
The non-gaming revenue of the group also recorded a year-on-year increase of 18 per cent year-on-year to HK$3.2 billion.
Mass leading the way
According to the company’s results, its flagship property Galaxy Macau ‘experienced good luck in its gaming operations’ during the year, with property revenue increasing 7 per cent year-on-year to HK$38 billion, accounting for nearly 72 per cent of the group’s total revenue.
In particular, mass gaming revenue at the property registered a year-on-year increase of 20 per cent to HK$13.9 billion whilst VIP revenue only recorded a slight decrease of 2 per cent year-on-year to HK$20 billion.
The mass-only Broadway Macau also saw gaming revenue from mass market tables surge 58 per cent year-on-year to HK$449 million while that from electronic machines jumped by half year-on-year to HK$30 million, driving total property revenue up by 59 per cent year-on-year to HK$676 million.
However, StarWorld Macau on the Peninsula registered a decline in total revenue of 9 per cent year-on-year to HK$11.8 billion as its VIP gaming revenue fell by 22 per cent to HK$6.6 billion, despite that derived from the mass tables growing by 18 per cent to HK$4.9 billion.
Phase 3 & 4 works soon
Saying it is confident in the medium to longer-term outlook of the MSAR, the company said in the results that it will ‘potentially’ kick off the construction of Galaxy Phase III and Phase IV within this quarter or early next quarter.
According to Francis Lui, the construction of Phase III is currently pending the green light from the Macau Government while Phase IV is still under planning.
But the deputy chairman believes the two projects – with total investment costing from HK$40 billion to HK$50 billion – are not likely to see “any more future delays”.
Questioned about the company’s projection for the year’s gaming revenue, the company executive indicated business performance “was not as good as expected” in January but he is confident that the mass segment “will continue to grow faster” and possibly reach “a double digit growth”.
The group also said in the results that the company was encouraged by the last five months of 2016 where the city started to see recovery in gaming revenue growth. ‘We hope that this will develop into a definitive trend over the course of 2017 and beyond,’ the company wrote.
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Lui: “Well positioned” for Japan casino
During yesterday’s presentation, Mr. Lui Che Woo expressed the group’s interest in expanding its footprint to Japan for the first time, saying Galaxy is “well positioned to penetrate [Japan’s] gaming market” given its longstanding relationship with Japanese partners such as Hotel Okura.
“The gaming industry in Japan is being legalised so all eyes are on the Japanese market; however, the country’s service and entertainment industry is very well refined so we will take the route of partnership with local players to make room for development,” said Mr. Lui.
Following Japan legalising gaming operations last December the city’s major gaming operators or their parent companies have all expressed interest in grabbing a slice of the cake in the Japanese market, with the exception of SJM Holdings Ltd.
http://macaubusiness.com/sjm-net-profit-falls-5-6-pct-in-2016/
