Galaxy Entertainment Group expects to complete the next phase of the build-out of its Galaxy Macau megaresort by the middle of 2015.
The publicly traded resort giant (HKSE: 0027) also announced a budget of HK$50 billion-$60 billion for phases 3 and 4 of the expansion at the resort, located at Macau’s booming Cotai resort district. Construction on these is expected to begin the end of this year or early in 2014, Galaxy said, and will encompass 1 million square meters.
The company added that it will submit plans this year for Phase 3 and 4, which will be designed to target Macau’s lucrative “premium mass” players.
In its analysis of the fourth-quarter and 2012 results the company released this week, Union Gaming Research Macau says the expansion, once complete, will put Galaxy at No. 2 behind Sands China as the territory’s largest supplier of hotel and gaming inventory.
“In the context of long-tailed mass-market growth, we remain believers that there is no substitute for lots of supply,” UGRM’s Grant Govertsen wrote. “Through the end of the decade, no other Macau casino concessionaire has a similarly sized developable land bank as Galaxy.”
With a full year of results from flagship Galaxy Macau, 2012 was a banner year for GEG, with group adjusted EBITDA up 71% on a 38% increase in revenues to HK$56.7 billion. Net profit grew 146% to HK$7.4 billion. Galaxy Macau generated almost 60% of those revenues and delivered HK$6.5 billion in adjusted pre-tax earnings.
On the Macau peninsula, the company’s StarWorld continues to be a prodigious profit driver, delivering a return on investment of 94% last year and contributing $3.2 billion in EBITDA, a 10% increase over 2011.
“The year was defined by a continued shift in the market to the higher margin mass segment and solid VIP revenues at both our properties,” said GEG founder and Chairman Lui Che Woo. “GEG’s well-balanced portfolio of complementary properties is now effectively catering to a broad customer base that is focused on tourism, leisure and travel.”
