Macau concessionaire Galaxy Entertainment Group returned to profit in 1Q23, with Adjusted EBITDA of HK$1.91 billion (US$244 million) climbing from HK$600 million (US$77 million) in the same period last year and from a HK$200 million (US$26 million) loss in the December 2022 quarter.
The vastly improved performance, which comfortably beat consensus of HK$1.7 billion (US$217 million), follows the reopening of Macau’s borders from 8 January and the rapid return of customers in the months since. As a result, group-wide net revenue climbed 72% year-on-year and 142% quarter-on-quarter to HK$7.05 billion (US$902 million), including gross gaming revenue of HK$6.07 billion (US$776 million). Mass table win comprised the majority of GGR at HK$4.94 billion (US$632 million) with VIP win of HK$794 million (US$102 million) and slots win of HK$337 million (US$43 million).
Non-gaming contributed revenues of HK$1.03 billion (US$132 million) – up 66% year-on-year and 105% sequentially – while GEG’s construction materials division added a further HK$698 million (US$89 million).
By property, Galaxy Macau booked GGR of HK$5.06 billion (US$647 million) – a 79% improvement over the same period last year – with Adjusted EBITDA of HK$1.85 billion (US$237 million). At StarWorld, GGR of HK$958 million (US$123 million) was 128% higher year-on-year and 298% higher quarter-on-quarter, pushing the property back into an Adjusted EBITDA profit of HK$216 million (US$28 million).
Broadway Macau maintained a HK$10 million (US$1.3 million) Adjusted EBITDA loss on net revenues of HK$18 million (US$2.3 million), while City Clubs booked HK$3 million (US$384,000) in Adjusted EBITDA with net revenues climbing 550% over 1Q22 to HK$52 million (US$6.6 million).
In an investor note published shortly after GEG’s results release on Monday morning, Jefferies analyst Andrew Lee observed that the company had been restrained by labor issues in the March quarter but said GEG “remains top pick in the sector due to attractive product, net cash and Phase 3 opening (of Galaxy Macau), which will attract foot traffic given new product with soft opening since April 2023.
“Further, the company noted 1Q23 was negatively impacted by staff constraints with only ‘just over 60% of hotel rooms available for guests’ but are currently fully staffed at their properties except for Broadway hotel.”
Commenting on its current outlook in the wake of border restrictions having eased, GEG said, “We are now firmly focused on the development of [Galaxy Macau] Phase 4, which is already well under way. We see the premium market evolving with this segment preferring higher quality and more spacious rooms.
“We continue to proceed with the construction of Cotai Phase 4, our next generation integrated resort, which will complete our ecosystem in Cotai. Phase 4 will include entertainment, retail, F&B, gaming and multiple hotels. On completion our total Macau hotel capacity will be around 7,500 rooms and suites.
“As you can see, we remain highly confident about the future of Macau where Cotai Phases 3 and 4 will support Macau’s vision of becoming a World Centre of Tourism and Leisure.”
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