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China – Galaxy falls 52 per cent with 12 days of closures taking its toll

By - 11 November 2022

Macau’s troubles continued to weigh heavily on Galaxy Entertainment Group with net revenue down 52 per cent from last year and 16 per cent quarter-on-quarter with VIP play contributing little.

Adjusted EBITDA was HK$581m versus HK$503m in Q3 2021 and HK$384m in Q2 2022.

Galaxy Macau is the primary contributor to the group’s revenue and earnings. Net Revenue in
Q3 2022 was HK$1.1bn, down 62 per cent year-on-year and down 25 per cent quarter-on-quarter. Adjusted EBITDA was HK$299m versus HK$454m in Q3 2021 and HK$188m in Q2, 2022.

Galaxy Macau played unlucky in its gaming operations which decreased its Adjusted EBITDA
by approximately HK$20m in Q3 2022. Normalised Q3 2022 Adjusted EBITDA was
HK$279m, versus HK$442m in Q3 2021 and HK$212m in Q2 2022. Hotel occupancy of available rooms for Q3 2022 across the five hotels was 26 per cent.

StarWorld Macau’s Net Revenue in Q3 2022 was HK$158m, down 76 per cent year-on-year and
down 28 per cent quarter-on-quarter. Adjusted EBITDA was HK$169m versus HK$25m in
Q3 2021 and HK$158m in Q2 2022.

Dr. Lui Che Woo, Chairman of Galaxy Entertainment, said: “The elevated COVID-19 related travel restrictions imposed in Q2 flowed into Q3 and even resulted in the closure of casinos for 12 days during the quarter. This impacted visitation, revenue and profitability. In Q3 2022, Group Net Revenue was HK$2bn, down 52 per cent year-on-year and down 16 per cent quarter-on-quarter.

“We are encouraged by Macau reopening its borders to 41 foreign countries on 1 September 2022
where visitors are required to undergo seven days of hotel quarantine upon entry. Furthermore, the
resumption of E-visas was effective on 1 November 2022, and package tours to Macau are expected
to resume shortly. It is anticipated that this will drive an increase in visitation and revenue for the
market. Going forward in the medium to longer term, we remain confident in the future of Macau. However, we do acknowledge that further potential outbreaks of COVID-19 may impact our future financial performance.”

“We continue to make ongoing progressive enhancements to our resorts to ensure that they remain
competitive and appealing to our guests. GEG is uniquely positioned for long term growth. Phase 3 is effectively completed and we look forward to welcoming the iconic Raffles at Galaxy Macau through an exclusive 450 all-suite tower,” he added.

“We will align the opening with prevailing market conditions. We intend to follow this with the
opening of the GICC and Andaz Macau in anticipation of the recovery of the MICE and
entertainment markets. We are now firmly focused on the development of Phase 4, which is already well under way. We see the premium market evolving with this segment preferring higher quality and more spacious rooms. We continue to proceed with the construction of Cotai Phase 4, our next generation integrated resort, which will complete our ecosystem in Cotai.”

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