Galaxy Ent 4Q EBITDA up 207pct sequentially: firm

Galaxy Ent 4Q EBITDA up 207pct sequentially: firm

Macau casino operator Galaxy Entertainment Group Ltd reported adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD1.01 billion (US$129.0 million) for the fourth quarter of 2020. It represented a 207.1-percent improvement compared to an adjusted EBITDA loss of HKD0.94 billion reported in the preceding quarter, said the company in a Thursday filing to the Hong Kong Stock Exchange announcing its full-2020 results.

In year-on-year terms, EBITDA for the fourth quarter was down 75.1 percent, the firm said.

Galaxy Entertainment reported a loss of HKD3.97 billion for full-year 2020. It had recorded a profit of HKD13.04 billion in 2019.

The firm posted negative EBITDA of HKD1.02 billion for the 12 months ended December 31, impacted by a negative EBITDA of HKD1.99 billion related to its gaming and entertainment segment. Galaxy Entertainment recorded overall positive EBITDA of HKD16.48 billion in 2019.

The firm did not declare any final dividend for 2020.

Galaxy Entertainment runs its flagship casino resort Galaxy Macau (pictured) on Cotai; the StarWorld Hotel, the group’s main venue on Macau peninsula; and Broadway Macau, a mass-market focused property next door to Galaxy Macau.

For the three months to December 31, Galaxy Entertainment reported net revenue of HKD5.10 billion, down 60.7 percent year-on-year, but up 229.2 percent sequentially.

The group recorded net revenue of HKD12.88 billion for full-year 2020, down 75.2 percent year-on-year.

The group’s aggregate gross gaming revenue (GGR) in the fourth quarter stood at HKD4.64 billion, a decline of 67.9 percent from the prior-year period, but up 435.5 percent from the preceding quarter.

Mass GGR for the period was nearly HKD2.82 billion, up 684.7 percent sequentially. VIP GGR stood at HKD1.65 billion, an increase of 74.5 percent compared with the third quarter.

The group’s aggregate GGR for full-year 2020 was HKD11.52 billion, down 80.6 percent year-on-year.

In Thursday’s filing, Galaxy Entertainment said the timetable for the development of Phases 3 and 4 of the Galaxy Macau property “may be impacted” because of the pandemic. “At this point we cannot quantify the impact, but we will endeavour to maintain our schedule,” noted the firm.

In November last year, two separate brokerages had said – citing commentary by the management – that the completion date for Phase 3 at Galaxy Macau had been pushed back to the second half of 2021.

Galaxy International Convention Center (GICC) – part of Phase 3 of the Galaxy Macau resort – is likely to be launched in stages starting from the second half of this year, said on Wednesday Joey Pather, a senior vice president at Galaxy Entertainment.

The casino firm said earlier this week that it had signed a MOP13.01-billion (US$1.63-billion) deal with a local unit of China State Construction International Holdings Ltd for the building of Galaxy Macau Phase 4.

‘Signs of early recovery’

Lui Che Woo, chairman and founder of Galaxy Entertainment, said in a letter accompanying the results announcement that the EBITDA improvement in the final quarter of last year “was largely driven by an increase in visitation which translated into increased revenue and continuing cost control.” But Mr Liu pointed out that the fourth-quarter results were still impacted by Covid-19, as “Mainland China, Hong Kong and Macau continued to experience travel restrictions and social distancing measures” as countermeasures to contain the pandemic.

The Galaxy Entertainment chairman said the firm had “great confidence in the future of Macau” in the medium to longer term. “We have seen signs of early recovery post the reinstatement of the Individual Visit Scheme in late September 2020 and it may take a few more quarters for business volumes to ramp up,” he added.

Mr Lui however acknowledged the “ongoing difficulties associated with Covid-19 and potential future flare ups” of the disease. That, he said, “could have a material adverse impact” on Galaxy Entertainment’s financial performance.

He also touched on the topic of concession refreshment in Macau. The six incumbent Macau casino licensees face a fresh public tender for Macau gaming rights, associated with the June 2022 expiry of their current permits.

“Chief Executive Ho Iat Seng stated that the government will promote the stable and healthy development of the gaming industry, and to commence preparatory and preliminary work for the new gaming concessions,” Mr Lui said. “We are looking forward to the launching of the public consultation in the second half of 2021.”

According to the local government’s policy agenda for 2021, the Macau authorities plan to complete a revision to the city’s gaming law by the fourth quarter, prior to submitting a finalised draft bill to the Legislative Assembly. But the timetable could be influenced by a public consultation process the government has pledged to hold.

A revision to the city’s gaming law has been flagged by the local authorities as necessary for a casino concession public rentender process.

Looking outside of Macau, Mr Lui stated that Galaxy Entertainment remained engaged in its international expansion plans, including Japan.

“Due to our conservative financial management, the group’s net cash as at [2020] year-end provides us with valuable flexibility in managing our ongoing operations and allows us to continue with our longer term development plans,” he added.

Galaxy Entertainment said in its Thursday filing that the group’s cash and liquid investments amounted to HKD46.0 billion as of December 31, with net cash of HKD36.8 billion. The group’s debt as of that date stood at HKD9.2 billion.

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