Macau casino giant Galaxy Entertainment Group capped a strong 2013 with a blow-out fourth quarter that saw adjusted EBITDA surge 41% year on year to HK$3.5 billion (US$448.7 million) on a 32% increase in revenues to HK$18.9 billion ($2.42 billion).
Growth was robust across all segments, with VIP revenue up 30% to HK$13.1 billion on a 33% increase in rolling chip volume. Mass win hit $4.12 billion, up 47%, as drop grew 13%. Slot handle was up 33% and generated $424 million in revenue.
On Cotai, the company’s flagship Galaxy Macau posted a 35% increase in EBITDA year on year to $2.51 billion and accounted for 57% of VIP volume and 71% of drop on the group’s cash floors. StarWorld on the Macau peninsula also performed well, growing EBITDA by 60% on gaming revenue that was up 27% to $6.31 billion. Rolling chip volume increased 24%. Mass drop was up 14%.
For the year, Hong Kong-listed GEG (0027) posted EBITDA of HK$12.6 billion ($1.61 billion), a 28% increase over 2012, on a 16% increase in revenue to $66 billion ($8.46 billion) and ended 2013 with a net profit of $10.1 billion ($1.29 billion) and HK$10.3 billion in cash and almost no debt.
The company also declared a dividend, its first, amounting to HK$0.70 and payable on or about 31st July.
“I am deeply excited by the journey ahead,” said Hong Kong construction magnate Lui Che Woo, the company’s founder and chairman. “We have an excellent development pipeline.”
GEG is on track to complete its Phase 2 expansion of Galaxy Macau by mid-2015, he said, adding that construction could start on phases 3 and 4 before the end of this year. An extensive refurbishment under way at the company’s Grand Waldo casino, which adjoins the resort, is progressing, he said.
“No other Macau casino concessionaire has a similarly sized developable land bank as Galaxy, which gives them a future pipeline of no less than four new projects,” noted analyst Grant Govertsen of Union Gaming Research Macau.
Galaxy capped the earnings announcement with news that it will develop a RMB10 billion luxury resort (US$1.6 billion) on Hengqin Island, which lies across a narrow straight from Cotai and is the locus currently of more than RMB226 billion worth of investment in a variety of leisure, hospitality, residential, educational and commercial projects.
GEG’s will be built on 2.7 square kilometers of waterfront—an area six times the size of its Cotai parcel—and is expected to include several thousand hotel rooms and other non-gaming attractions.
Mr Govertsen said, “The completion of this Macau/Hengqin pipeline could put the company in the leading supply position in the region as measured by wholly owned hotel rooms, table games and slot machines. In the context of long-tailed mass-market growth, we remain believers that there is no substitute for as much supply as possible.”
