Galaxy Entertainment counts Macau's biggest winnings
Zach Coleman, Nikkei Asian Review deputy editor
HONG KONG -- Galaxy Entertainment Group has emerged as the star performer of Macau's casino industry, taking the top market share and generating the only half-year net profit gain among the city's six operators.
Investors welcomed the news, pushing Galaxy's shares up 3.7% in afternoon trade to a close of 26.35 Hong Kong dollars after the company's midday announcement.
Galaxy last year trailed rivals Sands China and SJM Holdings in market share, but outperformed them and the city's other three operators in the first half. Galaxy's six casinos took in 24.1 billion Hong Kong dollars ($3.11 billion) in winnings in the first six months of 2016, outpacing SJM's HK$20.88 billion and Sands' $2.61 billion.
Galaxy could be challenged to hold onto the top spot as Sands is to open the $2.7 billion Parisian Macao resort on Sept. 13, complete with a replica of the Eiffel Tower. Wynn Macau, among the city's smaller operators, launched its $4.2 billion Wynn Palace complex on Monday.
Galaxy officials took pains to accentuate the positive at a press conference Thursday. President Michael Mecca said that by bringing on more quality hotel rooms and non-gaming attractions, the new resorts "will help us bring more visitors to Macau."
Galaxy's takings, like those of its rivals, fell in the first half from a year earlier. Its total winnings slipped 2% but its success lay in raising takings from low-stakes gamblers by 22% to $10 billion while the overall mass market saw continued declines.
Company executives were hesitant to say whether the Macau market had turned a corner too. "The market is showing signs it has hit bottom," Deputy Chairman Francis Lui said. Robert Drake, group chief financial officer, said, "It is too early to definitively call the bottom of the market."
Critical to Galaxy's first-half net profit of HK$2.56 billion, up 26.7% from a year earlier, was a 45.6% jump in revenue from the hotels and shopping areas in the three casino complexes it owns itself; the completion of two expansion projects added three hotels and more shop spaces in May 2015 in and around its flagship Galaxy Macau Resort in the Cotai district. Drake said the company's seven Macau hotels were 97% full during the April-June quarter. Galaxy also operates casinos in three hotels owned by other companies.
"We continue to enhance our non-gaming offerings to help diversify and grow both GEG's revenues and the Macau economy," said Chairman Lui Che-woo.
Drake said that the company had achieved HK$800 million in cost cuts from marketing, purchasing and staff expenses during the first half though no workers were forced out. He said the company would implement another HK$300 million in cuts during the second half of the year.
The company declared a special dividend of 18 Hong Kong cents a share, but is not paying an ordinary interim dividend. It also paid a special dividend of 15 Hong Kong cents in April.