Rolling the dice

Galaxy Entertainment Group Ltd. has pushed out quarterly results about a month earlier than usual, turning its attention to opening two new Macau casinos and winning back gamblers scared away by China’s crackdown on corruption.
The casino operator reported that first-quarter adjusted earnings before interest, taxes, depreciation and amortisation, or adjusted Ebitda, fell 40 per cent to HK$2.3 billion (US$297 million), matching the median estimate of five analysts surveyed by Bloomberg. Revenue dipped 32 per cent to HK$13.7 billion, driven by a decline in high-stakes gamblers.
Galaxy “must be busy internally” preparing for the opening of the expanded resorts, Victor Yip, an analyst at UOB- Kay Hian Holdings Ltd., said in an interview. “The new projects are so big they want to get this out of the way before moving to the next thing,” he said.
The company is expanding as Macau casinos expect gaming receipts to fall to their lowest level since 2011 as the Chinese economy slows and President Xi Jinping’s nationwide graft crackdown stretches into a third year. Gross gaming revenue in the world’s largest gambling hub fell 39 per cent to MOP21.5 billion (US$2.7 billion) last month – the 10th consecutive monthly decline.
Galaxy is due to open the two projects on Macau’s Cotai Strip on May 27, making it the first of the city’s six casino operators to open a wave of new and expanded resorts. In each of the past three years, Galaxy has reported first-quarter results in mid-May.

Bad to worse

Galaxy shares rose as much as 4 per cent to HK$38 in Hong Kong trading, amid a 0.1 per cent decline in the benchmark Hang Seng Index. The BI Macau/China Gaming Market Competitive Peers Index was up 2.3 per cent yesterday.
Analysts have raced to slash their forecasts for Macau casino revenue this year following a lacklustre Lunar New Year showed the pace of the downturn was accelerating.
Demand from Chinese high-rollers “appears to be undergoing another leg down amid ever strengthening anti-corruption efforts,” DS Kim, an analyst with JP Morgan Chase & Co., wrote in a note on Thursday. He now forecasts a 23 per cent decrease in Macau gaming revenue this year, down from 18 per cent previously.
Galaxy reported that first-quarter revenue from VIP gamblers sank 41 per cent to HK$8.7 billion, while its mass market sales slumped 16 per cent to HK$4.3 billion.
‘We remain optimistic in the longer term outlook for Macau despite the current challenges and we are now absolutely focused on executing the openings of Galaxy Macau Phase II and Broadway at Galaxy Macau,’ the company said in its earnings announcement.