COVID-19 and the bankruptcy of VIP had an effect on Galaxy Entertainment Group in the first quarter
Galaxy Entertainment Group reported a 20 percent year-over-year and 14 percent sequential decline in group-wide net revenues to HK$4.1 billion (US$522 million) in the first quarter of 2022, as COVID-19 outbreaks in mainland China and subsequent travel restrictions reversed many of the company's gains from the latter half of 2021.
Adjusted EBITDA of HK$575 million (US$73 million) was also down 33 percent year-over-year and 45 percent from the quarter ending December 2021.
The results for the first quarter comprised gross gaming revenue of HK$3.4 billion (US$433 million), down 29 percent year-over-year and 13 percent quarter-over-quarter, with the majority of the decline attributable to the demise of Macau's junket business. The rolling chip GGR decreased by 69 percent year-over-year to $566 million (US$72 million), whereas the mass table GGR down by just 7 percent on 1Q21 to HK$2.7 billion (US$345 million). The gross gaming revenue (GGR) from electronic gaming machines (EGM) increased by 25 percent annually and 2 percent sequentially to HK$162 million (US$21 million).
At the flagship IR Galaxy Macau, GGR decreased 17.5% year-over-year to HK$2.8 billion (US$357 million) – likewise lower than the HK$3.0 billion (US$382 million) reported in 4Q21 – while Adjusted EBITDA down 5% to HK$724 million (US$92 million).
StarWorld, which no longer provides rolling chip games, had its gross gaming revenue (GGR) collapse by 65 percent to HK$420 million (US$54 million). Similarly, Broadway Macao, which is presently functioning as a "self-health management hotel," had no gaming income and an Adjusted EBITDA loss of HK$17 million (US$2 million) for the quarter.
GEG continues to outperform its Macau rivals in terms of fiscal management and is the only one of the six concessionaires to have remained self-sufficient throughout the COVID-19 epidemic without resorting to debt.
As of 31 March 2022, the company's cash and liquid investments were HK$35.0 billion (US$4.5 billion), and its net cash amounted to HK$24.5 billion (US$3.1 billion).
GEG also voiced optimism about its future, although it has yet to specify an opening date for the Galaxy Macau Phase 3 expansion project, which is now "essentially done." It was indicated that facilities will open gradually based on "prevailing market circumstances."
“We are well positioned to capture mass customers when the market returns as well as MICE business with the opening of the Galaxy International Convention Center,” GEG said.
“Following the closure of the VIP business, we have been reallocating our resources and marketing efforts to the mass-oriented tourists whom appreciate GEG’s extensive array of resort offerings.
“Macau concessionaires continue to work with the Macao Government Tourism Office to actively promote Macau as a safe tourism destination and has hosted a series of roadshows and exhibitions in a numbers of Mainland cities. We will continue to actively support this important government initiative.
“Despite sporadic outbreaks in greater China over the past two years, Macau has demonstrated an ability to bounce back quickly when travel restrictions were eased, indicating solid pent-up demand. Moreover, we continue to remain optimistic and encouraged that we see strong signs of healthy demand for Macau and are very confident that the leisure and tourism sector will bounce back.”
By fLEXI tEAM