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China – Galaxy smashes predictions with 35 per cent profit increase

By - 20 August 2013

Macau casino operator Galaxy Entertainment Group thrashed analyst forecasts for its first half performance with a 35 per cent surge in net profit as Macau shows no sign of slowing.

The owner of Galaxy Macau and Star World also recorded record EBIDTA of HK$5.8bn up 23 per cent year on year. Net income for the first six months of 2013 came in at HK$4.6bn (US$593.1m) compared to HK$3.4 billion for the first half of 2012. The figure smashed the average analyst forecast of HK$4.4bn.

Dr. Lui Che-woo, Chairman of GEG said: “We are very pleased to report improving financial results across the business and that Phase 2 of Galaxy Macau remains on schedule. The Group also expanded its existing Cotai landbank with the strategic purchase of the Grand Waldo Complex.  We also strengthened our balance sheet by prepaying a significant portion of our bank borrowings. I am particularly delighted that the half year culminated in the Group being included as a constituent of the Hang Seng Index. Looking into the future, Macau’s prospects for the remainder of 2013 and beyond continue to be bright. We believe that our development pipeline for Phases 2, 3 and 4 plus the Grand Waldo Complex on Cotai position us well for continued growth.”

Of the gaming segments, mass once again recorded the fastest rate of growth as Galaxy Macau’s mass net win improved from HK$3.3bn in H1 2012 to $4.8bn in H1 2013, an increase of 45 per cent. StarWorld Macau also achieved excellent growth, with net win rising 50 per cent from $1.1bn in H1 2012 to $1.7bn in H1 2013.

Galaxy Macau’s status as the Group’s growth engine was again exemplified by it recording revenue of $18.1bn, an increase of 13 per cent against the same period last year. Electronic gaming revenue rose 30 per cent year-on-year to $742m. StarWorld Macau’s half year revenue was $11.6bn, up two per cent year-on-year

During the first half of 2013, City Clubs generated $94m of Adjusted EBITDA, an increase of 15 per cent year-on-year.

The Macau gaming market as a whole experienced another robust period of growth as total gaming revenue increased by 15 per cent year-on-year to $166.5bn. Revenue in the second quarter grew by 16 per cent year-on-year to an all-time record $83.7bn.

The evolution in the market toward the mass segment continued in the first half of the year, with higher margin mass revenue growing 30 per cent year-on-year to $47.1bn. Galaxy expects the ongoing major improvements in infrastructure and transport links over the coming years such as the expansion of the Zhuhai Gongbei border gate and the Macau Taipa Ferry Terminal, the construction of Macau’s Light Rail and the Hong Kong-Zhuhai-Macau Bridge, to dramatically improve access and boost visitation.

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