Lady luck lifts Galaxy Ent H1 net profit
Net profit of HongKong-listed casino operator Galaxy Entertainment Group Ltd. (GEG) rose by 81 percent in the first half of the year as lady luck continues to smile upon its over-all gaming operations.
GEG announced before the HongKong bourse on Thursday that the firm posted HKD4.63 billion (US$591.7 million) profit, compared to nearly HKD2.56 billion (US$327.13 million) in the prior-year period.
Its revenue likewise grew 12 percent to HKD28.5 billion (US$3.64 billion) year-on-year while its adjusted EBITDA was up 37 percent to (U$830.6 million).
“During 1H 2017, GEG experienced good luck in its gaming operations which increased Adjusted EBITDA by approximately $20 million,” the casino operator said in its financial report.
Investment analysts, however, pointed out that the net profit growth in GEG is not only a result of pure luck.
Union Gaming analyst Grant Govertsen pointed out that the mass market continues to be the sweet spot for the company while the firm’s EBITDA exceeded their forecast by 5 percent.
Data showed that GEG’s total mass table games revenue was HKD11.4 billion (US$1.46 billion), up 15% year-on-year, while total VIP revenue was HKD13.9 billion (US$1.78 billion), up 5% year-on-year.
Total electronic gaming revenue was $1.1 billion (US$140.5 million), up 12% year-on-year.
“We would expect the company’s VIP performance to continue to improve on a sequential basis and are modeling as such,” Govertsen said in his note. “Mass market continues to be the sweet spot for the company, the seventh consecutive quarter of double-digit growth in this segment.”
Morgan Stanley also echoed Union Gaming’s statement that the first-half EBITDA of Galaxy was above their two percent estimates.
Despite experiencing “bad luck” in its gaming operations, Galaxy Macau’s first half revenue grew 8 percent to HKD20.1 billion (US$2.57 billion). VIP rolling chip volume at Galaxy Macau for first half 2017 was HKD264.7 billion (US$33.82 billion), up 8 percent year-on-year. This translated to VIP revenue of HKD9.9 billion (US$1.27 billion), up 1 percent year-on-year.
Union gaming has raised its estimates for Galaxy to reflect trends seen in 2Q17 and ongoing sequential improvements in the company’s underlying business (both VIP and mass).
“We continue to be very impressed with Galaxy’s mass operations (both at Galaxy Macau in Cotai and StarWorld on the peninsula) based on our numerous on-the-ground observations. The levels of mass foot traffic at Galaxy Macau have been exceptional (potentially rivaling its neighbor the Venetian), driven in part by the company’s ongoing efforts to rethink the property from both a gaming and non-gaming perspective (especially F&B),” Govertsen said.
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