Galaxy net profit up 28 percent in Q3

Tuesday 25th of October 2016

Macau casino operator Galaxy Entertainment Group posted a 28 percent year-on-year rise in net profit in the third quarter of 2016, above analyst expectations.

In a filing to the Hong Kong Stock Exchange on Wednesday, the operator said it was “encouraged by the continuing signs of market stabilization.”

The company reported profit of HK$2.7 billion ($348.1 million) for the quarter ended in September, while revenue rose 5 percent to HK$12.9 billion.

Group Adjusted EBITDA rose 28 percent year-on-year to HK$2.7 billion.

While October results look promising, the operator said it remains too early to call a bottoming out of the market.

“The recently reported growth in monthly revenue in August and September followed by a strong Golden Week in October are encouraging signs, but we would like some more time before calling it a definitive trend,” said Galaxy.

Morgan Stanley analysts said its performance in mass was a particular highlight in the quarter.

“Galaxy mass revenue grew... 17 percent year-on-year, better than market growth of +6 percent year-on-year,” said MS.

“Galaxy is outperforming the market despite the addition of new supply during the quarter,” said Union Gaming.

Non-gaming revenue also grew 18 percent quarter-on-quarter, driven by a 24 percent quarter-on-quarter growth in retail rental income and decent hotel occupancy, said Morgan Stanley in a note on Wednesday.

“Underlying visitor demand remains solid with GEG’s hotels remaining virtually fully occupied during the period. The opening of additional hotel rooms and resort related amenities at Galaxy Macau Phase 2 and Broadway Macau in 2015 saw an increase in the number of visitors who stayed overnight. Importantly, visitors who stay overnight generally have a higher spend per customer, with a particular focus on higher margin, non-gaming spend,” said Galaxy.

In relation to development, the operator says it continues to move forward with Cotai Phase 3, “with the potential to commence site preparation works in late 2016 and Phase 4 in 2017.”

It says it expects to provide additional information on its development plans in late 2016 or early 2017.