Galaxy Entertainment hit by trade war, weakening China, but confident on long-term
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Galaxy Entertainment hit by trade war, weakening China, but confident on long-term

Gaming giant Galaxy Entertainment reported earnings this week that demonstrated the impact of the US / China trade war and a weakening Chinese economy. These headwinds conspired to keep the company’s revenue down, though good luck on the part of the house (when the casino wins against customers more often than usual) brought its earnings up, leaving them flat against the comparable quarter in the previous year.

Galaxy’s share price declined on the back of weaker than expected earnings

Galaxy Aug 16

Source: Yahoo Finance

Earnings for the quarter came in at HKD 4.33 billion – flat against the year-ago period, but a sequential rise of 8.8% against the previous quarter. Revenue, however, declined by 5.4% year on year. Driving revenue over the quarter was a “solid” performance in Macau’s mass-market segment, which helped to offset the impact of a “challenging” VIP gaming sector.

These weaknesses were caused, according to Galaxy, by the impact of the on-going trade war and weakness in the Chinese economy. Despite this, the group’s chairman, Lui Che Woo, said that the company has “confidence in the longer-term outlook for Macau and for the company.”

Lui continued: “The overall market in Macau remains relatively stable despite a decrease in VIP volumes due to increasing regional competition, ongoing trade tensions and a slowing Chinese economy. We continue to reallocate our resources to the highest and best use and focus on growing the higher margin mass business.”

JP Morgan Securities (Asia Pacific) argued that the company’s performance should be seen in context, reflecting positively on Galaxy. In a note, the brokerage wrote: “We view Galaxy Entertainment’s mass performance as respectable amidst growing competitive pressure from new(er) casinos on the Cotai East (such as Morpheus, MGM Cotai), better than most other Cotai casinos this quarter.”


Dominion holds Galaxy Entertainment Group in its Global Trends Luxury Fund.

If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.