Hope that Galaxy Macau was going to bolster revenues may have been mislaid as June GGR is unlikely to go beyond Macau’s month-on-month GGR averages, said analyst David Bain at Sterne Agee.
Bain says that, while Galaxy’s expansion was not necessarily forecasted to boost averages, there was investor “hope” for more of an impact, with June GGR likely to fall behind historical MoM averages.
“Instead, June GGR will likely be something we believe investors will view skeptically ahead of an additional ~$14.1b of property opening investments through CY16.”
“Simultaneously, Galaxy’s relatively small increase in market share can be viewed both positively and negatively (negative from a market impact perspective – an indicator of other opening impacts - and positively from the standpoint of market share defensibility for other operators).”
Bain says Sterne Agee’s Macau contacts state that Galaxy’s new expansion has several outlets for ‘'locals,” and is therefore helping foot-traffic, but that the property is likely not attracting its desired gaming client base yet.
“Another factor is its relatively small table allocation versus investment. Proper table allocations will be necessary to forward opening successes, and we believe Galaxy’s relatively benign market impact to date demonstrates this.”
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