Having doubled its profit over the last year, Galaxy Entertainment has confirmed it will increase its investment on the second phase of Galaxy Macau from HK$16bn to HK$19.6bn.
The good news for the casino supply sector is that the third and the fourth phases will now need an additional1,000 gaming tables and 3,000 slot machines. It will invest up to HK$60bn in the third and fourth phases of Galaxy Macau to expand the resort, targeting premium mass customers with construction likely to begin at the end of 2013.
It said the second phase of its flagship casino would be completed in mid-2015.
In a quite astonishing year, Galaxy reported net profit more than double last year to HK$7.4bn from HK$3bn the previous year. Revenue surged 38 per cent to a record HK$56.7bn.
Dr. Lui Che-woo, Chairman of GEG said: “We don’t need to raise funds for the phase two project as we have enough reserves. Our performance in 2012 was noteworthy, with revenue and earnings hitting historic highs once again. Driven by strong performances from Galaxy Macau and StarWorld, GEG’s well-balanced portfolio of complementary properties is now effectively catering to a broad customer base that is focused on tourism, leisure and travel with revenue growing by 38 per cent to almost HK$57bn and Adjusted EBITDA up 71 per cent to just under HK$10bn.”
Comparing the level of growth in the mass segment against the increase in visitor numbers indicates that Macau is succeeding in attracting tourism and leisure-travellers. Galaxy expects this shift in the market to continue as a number of large scale infrastructure projects inMacau and in Mainland China, such as the Guangzhou-Zhuhai Intercity Mass Rapid Transit extension line and the Guangzhou-Zhuhai Super Highway ending at Hengqin Island, the Hong Kong-Zhuhai-Macau Bridge and the Light Rail Transit connectingMacau, Taipa and Cotai, are expected to be completed in the next two to three years which will dramatically improve access toMacau from Mainland China and connectivity within Macau.
Dr. Lui added: “The year was defined by a continued shift in the market to the higher margin mass segment and solid VIP revenues at both our properties. Galaxy Macau is starting to fulfil its enormous potential and the Group is operating as efficiently as it ever has. We are implementing new growth plans at StarWorld and expect a majority to be completed in mid-2013. We are confident that our revolutionary and captivating plans for Phases 3 and 4 in Cotai, will not only set a new benchmark for the global leisure and tourism industry, but will prove pivotal in generating substantially higher returns for shareholders for many years to come.
GEG remains fully committed to support the Macau government in leveraging on its advantages to diversify Macau and enhance its position as a world class tourism destination, and lay a solid foundation for Macau’s future development.”
Macau as a whole has continued to establish itself as one of the world’s premier tourism destinations, enhancing its wide choice of hotel, dining and entertainment options during the course of 2012.
Total gaming revenue for the year increased by 14 per cent to HK$295 billion, with the mass segment achieved the highest rate of growth at almost 33 per cent. Total visitor numbers rose marginally to almost 28.1m, with visits from Mainland China increasing at a faster rate. Mainland Chinese visitors now account for more than 60 per cent of total visitors.
During the year Galaxy Macau outperformed the wider market in the mass segment and improved its brand awareness.
Galaxy’s existing offering of Galaxy Macau and StarWorld, combined with exciting development plans for Phases 2, 3 & 4 on Cotai, certainly eave it well placed to benefit from Macau’s deeper penetration into China.