Preparations continue for Japan bid
At least part of Galaxy Macau’s Phase III will be open for business by 2019, says Galaxy Entertainment Group Chairman Francis Lui.
According to GGRAsia, Lui said “Part A” of Phase III will be open in that timeframe. He did not elaborate on the elements that comprise Part A, but said the operator is now accelerating the development of Galaxy Macau Phases III and IV, with the goal of completing both within two to three years. Galaxy Entertainment’s current Macau gaming rights are due to expire in 2022.
In February Lui said Phase III of the Cotai resort will feature 1,500 hotel rooms; a casino; a 16,000-seat arena; and MICE facilities. Phase IV will add approximately 3,000 rooms.
“Capital expenditure for Phase III and Phase IV projects in the first quarter was approximately HKD700 million (US$89 million), and total capex budget of HKD45 billion (US$5.7 billion) has not been changed,” brokerage Sanford C. Bernstein wrote in a note after Galaxy’s first-quarter results.
The company reported Q1 revenue of HKD18.5 billion (US$2.36 billion), up 32 percent from the prior-year period, supported by “record” mass-market gaming revenue and “strong” VIP revenue.
“We are very pleased to report that we have experienced a positive start to 2018, with all-time record quarterly adjusted EBITDA. This represents our 9th consecutive quarter of EBITDA growth despite competitive new capacity being added to the Macau market,” said Lui.
In a note to investors, JP Morgan Securities Asia Ltd. said Galaxy’s EBITDA margin “edged up to a record 23.3 percent” over 23.1 percent in the fourth quarter of 2017 and 22.6 percent in the first quarter of 2017. “This suggests cost savings are still under way, though it’s difficult to analyze accurately given changes in its disclosure,” wrote analysts DS Kim and Sean Zhuang.
Galaxy’s flagship Galaxy Macau generated HKD13 billion in revenue in the three months to March 31, up 27 percent year-on-year. The property’s adjusted EBITDA rose 26 percent year-on-year to HKD3.3 billion.
StarWorld Macau on the Macau peninsula, reported first-quarter revenue of HKD4.5 billion (US$1.65 billion), up 45 percent year-on-year. Adjusted EBITDA for the property increased 55 percent year-on-year to HKD1 billion. Broadway Macau, which does not offer a VIP rolling chip program, posted revenue of HKD142 million (US$18 million) for the quarter, up 5 percent year-on-year. The property recorded adjusted EBITDA of HKD13 million for the quarter ended March 31, compared to HKD6 million a year earlier.
Meanwhile, Galaxy’s planned $500 million resort on the Philippine island of Boracay seems to have been beached for now. That investment, proposed in partnership with local partner Leisure and Resorts World Corp., is on the shelf at least until the holiday island reopens for business after a six-month environmental cleanup that began in late April. The Hong Kong-listed firm said it intends to build a “premium quality, eco-friendly, low density, low rise resort that would include a small casino with up to only 60 tables.”
Galaxy also plans to “actively pursue” an integrated resort license in Japan with partner Société des Bains de Mer et du Cercle des Étrangers à Monaco, also known as SBM. “We are encouraged by the recent tabling of the IR Implementation Bill with the Diet parliament, and we look forward to the outcome of the Diet debate,” Galaxy said.
Galaxy Chairman Francis Lui recently told the Nikkei Asian Review, “We have a database of premium customers that would make the integrated resort industry in Japan very successful and hopefully help revive the Japanese economy.”
