Macau-based hotel and casino operator Galaxy Entertainment Group has come through a challenging first quarter, with the firm’s home market performance impacted by the introduction of the full smoking ban and increased competition from both local and regional casinos.
A decrease of eight per cent year-on-year saw revenue reach HK$13bn (US$1.6bn) from $14.1bn (US$1.8bn), as GEG continued to praise positive impacts set to be felt from a number of developments, for which updates were provided in its latest financial report.
Continuing plans to develop a Hengqin based lifestyle resort, to complement Macau’s “high-energy entertainment resorts,” its ongoing HK$1.5bn (US$191m) enhancement program for its Galaxy Macau and StarWorld Macau properties is slated to be completed in the early part of 2020.
Furthermore, the company also stressed that opportunities further afield are continuously being explored, with several international markets, Japan in particular, falling on the radar.
Breaking down the figures further, Galaxy Macau revenue came in at HK$9.3bn (US$1.18bn) for the first quarter, representing an 11 per cent drop on the previous year.
StarWorld Macau dropped seven per cent to $3bn (US$382m), with Broadway Macau increasing six per cent year-on-year as it reached HK$151m (US$19.2m).
Lui Che Woo, chairman of GEG, explained: “Overall given the prevailing market conditions, I believe the group delivered a solid financial result. During the first quarter, Macau experienced a number of events that impacted the market, most notably in the VIP segment.
“These included the introduction of the full smoking ban, plus increased competition from both local and regional casinos that have a significant economic advantage compared to Macau. We continue to progress with the previously announced HK$1.5bn renovation enhancement program in both Galaxy Macau and StarWorld Macau.
“Whilst there has been some disruption, we believe this enhancement program will make our resorts even more attractive to guests. We anticipate to complete this program in the early part of 2020. In Q1 2019, GEG reported net revenue of HK$13bn, down 8 per cent year-on-year and down 8 per cent quarter-on-quarter.
“Adjusted EBITDA was HK$4bn, down 8 per cent year over year and down 8 per cent quarter-on-quarter. We paid the previously announced special dividend of $0.45 per share on 26 April 2019. Our balance sheet remains healthy and liquid with total cash and liquid investments of $49.3bn, and net cash of $42.5bn as at 31 March 2019.
“Macau has continued to see strong growth in visitor arrivals post the opening of the Hong KongZhuhai-Macau Bridge and the continued build-out of the High Speed Rail Network. Visitor arrivals in the first quarter were 10.4m, up 21 per cent year-on-year.
“We continue with our development works for Phases 3 and 4, and with our planning for a lifestyle resort in Hengqin. We also continue with our efforts in Japan, where we have submitted numerous requests for information to selected Japanese cities and prefectures.
“2019 is an important year for China and Macau with a particular focus on three major events. These include celebrating the 70th anniversary of the founding of the People’s Republic of China, it is also the 20th anniversary of the return of Macau to China. Further, we look forward to the election of the next chief executive who will take office in 2019.
“We remain confident in the medium to longer term outlook for Macau in general and GEG specifically given the continued growth in demand for tourism, leisure and travel from Mainland China. We also believe the integration of Macau into the Greater Bay Area will be positive for the development of Macau. We are committed to supporting the Macau Government’s vision to develop Macau into a World Center of Tourism and Leisure.”