Mass revenue stabilizing but not trend yet: UBS

Thursday 16th of April 2015

Following Galaxy Entertainment’s financial results, UBS said there have been some signs of gradual stabilisation in mass segment revenue in recent weeks but it is too early to call it a “trend.”

“This is especially true for the mass segment, where management noted mass Buy-Ins in the last 3-6 weeks (i.e. from late Q1) have shown some decent numbers, although it is "too early to call a trend".

“We see this as an encouraging sign, though we caution that industry-wide daily GGR so far in Apr at MOP610m is >10% lower than Feb-Mar average. This might mean recent industry weakness has been driven more by VIP segment or hold issues – we think Galaxy's overall market share in Apr has been lower/consistent with Feb-Mar,” analyst Anthony Wong said in a note.

GEG’s 15Q1 EBITDA drop of 40 percent to HK$2.30 billion was inline with UBS’ and consensus estimates of HK$2.29 billion, Wong said.

“Better operating results in StarWorld/Galaxy Macau were driven by higher mass in business mix than expected – group mass revenue -15% YoY/+4% QoQ, higher than our forecasts of -18%/+1%; meanwhile group-wide VIP rolling volume was -43% YoY/-24% QoQ, inline with our forecasts.”

The analyst added that GEG’s hotel occupancy was lower than expected.

Separately, hotel occupancy at StarWorld/Galaxy Macau at 93%/95% in Q1 is lower than expected (though Apr to date rooms are full according to mgmt.), highlighting weak demand from overnight visitors.