Mass boosts Galaxy net profit, revenue in 2018

Thursday 28th of February 2019

Galaxy Entertainment Group posted a 29 percent rise in net profit for the full 2018 year, driven by solid mass gaming performance across its properties.

Said profit totaled HK$600 million (US$76.4 million), while group net revenue increased 14 percent in the year, totaling HK$55.2 billion.

Galaxy, however, said it experienced bad luck in its gaming operations in the year, which decreased its adjusted EBITDA by $484 million.

Normalized adjusted EBITDA for the year grew 22 percent to $17.3 billion.

Galaxy said its total GGR on a management basis was $67.2 billion, up 16 percent year-on-year. This was driven by strong gains across mass table GGR, VIP GGR and electronic games GGR.

“One of GEG’s business philosophies is to continuously search for products and offerings that will enhance our resorts and increase the appeal to customers. With this in mind, during 2018, we completed a number of enhancements to the main gaming floor, completed construction of new smoking lounges, and introduced some new F&B and retail concepts. We believe this approach keeps the property fresh and appealing, particularly to our repeat customers.”

Union Gaming analysts said they were pleased with the results, noting that Galaxy’s mass/slots segments continue to grow at rates close to the market average.

"As we look ahead over the balance of 2019, we forecast continued VIP softness across Galaxy’s portfolio (GGR -3 percent), but with mass market and slots growing at or above market-wide levels (mass +9 percent)."

Once again, its flagship, Galaxy Macau was the primary contributor to group revenue and earnings.

Galaxy Macau saw solid performance in the year, driven by mass and non-gaming, with full-year net revenue, up 14 percent year-on-year to HK$39.5 billion, and adjusted EBITDA up 16 percent year-on-year.

It was, however, hit by bad luck in gaming operations which negatively impacted its adjusted EBITDA.

At StarWorld Macau, GEG saw full-year revenue up 18 percent year-on-year to HK$12.2 billion, while adjusted EBITDA went up 28 percent year-on-year.

Galaxy’s Broadway Macau’s net revenue rose 9 percent to HK$562 million, and adjusted EBITDA rose more than three-fold to HK$32 million.

The company noted that occupancy rates were strong across all five of its combined hotels, which sat at “virtually” 100 percent for the whole of 2018.

Looking ahead, Galaxy said it intends to focus on the mass segment, which will be assisted by continued improvements in infrastructure, such as the HZMB.

It is also moving ahead with Phases 3 and 4 of Galaxy Macau, and said it will be formally announcing its development plans in the future.

The company is also proceeding to carry out a $1.5 billion property enhancement program for Galaxy Macau and StarWorld Macau.

In Hengqin, the company continues to make progress with its concept plan, which it says will allow GEG to “develop a leisure destination resort that will complement our high energy resorts in Macau.”

The company is also continuing to keep a close watch and make moves in Japan along with its partner, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco.