Galaxy Entertainment Sees 3Q Drop in Revenue

Written on December 7, 2007 by a2zMacau

Galaxy Entertainment Group announced a third quarter drop in revenue for the company as a whole and for its flagship casino Galaxy StarWorld yesterday.

Gross earnings at the StarWorld Casino Resort fell from HKD2,209 million in the second quarter to HKD,2096 in the three months to September 30 this year.

The drop was reflected in the group with revenue dropping from HKD3,443 million in the second quarter to 3,244 million in the last quarter.

The revenue fall was also shown in the earnings before interest, taxation, depreciation and amortisation (EBITDA), an indicator used to value the results of companies with large amounts of fixed assets.

The group’s EBITDA fell from HKD470 million in the second quarter to HKD372 million in the third.

At StarWorld EBITDA dropped from HKD366 million in the second quarter to HKD294 million last quarter. The earnings statement from the company failed to mention the drop, however said VIP turnover at StarWorld was up 8 percent on the last quarter to HKD 58 billion.

The win ratio from the VIP tables also dropped in the third quarter to 2.8 percent from 3.2 percent in the previous quarter. With the theoretical win value for VIP baccarat at 2.78 percent the group said it was satisfied with the result.

“The win rate in Q3 was within the expected range,” the statement said.

However gaming revenues from the tables fell by HKD73 million from the previous quarter to HKD1.6 billion.

Turnover has picked-up in the third quarter, the statement said, with the month of October seeing turnover of HKD21 billion, up almost one billion on the average of the previous three months.

The company is looking to capitalise on the VIP growth by increasing the number of dedicated tables.

“As at the end of November, the number of VIP tables at StarWorld had increased to 63 and we expect this to increase to approximately 70 tables by 31 December 2007,” the statement said.

The win percentage also dropped in the walk-in tables from 17 percent to 15 percent which lowered the win per table by HKD2,000 to HKD28,300.

The average number of tables in-play over the period also dropped from 150 to 137.

“While our mass gaming floors were disrupted over this period as we significantly changed the layout and presentation of the product, we are focused on improving the performance of the mass tables business going forward,” the company’s statement said.

Slot machine revenue for the quarter grew 6 percent to HKD51 million, with each of the casino’s 492 slot machines averaging a HKD1,120 win per day.

The average occupancy rate of the recently awarded “5 Star Diamond Hotel” was at 83 percent, with more than 50 percent of the rooms occupied by VIPs.

Cotai Strip
The quarterly statement also reported the first 1,500 room and casino tower of the Cotai Mega Resort project is on track to be completed by the end of 2008.

“The hanging of the curtain wall has commenced on the first tower and is scheduled to be completed by the end of February 2008,” the statement said.

“The casino podium structure is now 80 percent complete and will be fully complete by January 2008.”

Construction of the second tower is underway and is due to be completed during 2009.

Competition in the world’s largest gaming market will increase for the Hong Kong based operator with more entrants such as MGM Grand Macau, Ponte 16 and an expansion of Wynn Macau all expected in the new couple of months.

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