Galaxy Entertainment Group delivers record quarterly earnings
Galaxy Entertainment Group, a major casino operator in Macau, reported second quarter earnings last week that painted a positive picture of its underlying business in what is, traditionally, a slow quarter. That “slowness” was exacerbated by the World Cup, which saw (temporarily) punters looking to make a flutter turn towards soccer and sports betting rather than casinos. Despite these headwinds, Galaxy held up well.
After rising on the back of quarterly earnings, investors are exercising more caution than gamblers when it comes to Macau (pictured below: Galaxy’s last 5 days)
SOURCE: Yahoo Finance
For the quarter, Galaxy Entertainment Group delivered net revenue of $13.9 billion – that’s a 22% rise against the comparable quarter from 2017, but a 1% decline quarter-on-quarter. That’s a reflection of two things: first, that the second quarter is generally slow. And second, that – as second quarters go – this has been a good one. When it comes to earnings, the picture is impressive: full hotel rooms contributed significantly, pushing the Group’s adjusted earnings before interest, tax, deductions, and amortization (EBITDA) into record territory at $4.3 billion, representing a 32% rise against the previous year. However, bad luck at the gaming tables pushed these earnings down by around 2.5%.
Speaking to the future, Dr. Lui Che Woo, the company’s chairman, said: “We remain confident in the outlook for Macau and GEG specifically over the longer term due to the significant market demand for leisure, tourism and travel. However, we do acknowledge that in the shorter term the global trade tensions, currency volatility and the overall slowing economy may impact consumer confidence in the second half of 2018. We look forward to the opening of additional infrastructure projects such as Hong Kong-Zhuhai-Macau Bridge and the extended train line that will support the future growth of Macau and the integration of the Greater Bay Area.”
Dominion holds Galaxy Entertainment Group in its Global Trends Luxury Fund.
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