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Galaxy revenue up 60 pct on Cotai resort

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image Galaxy Entertainment Group delivered revenue of HKD 13.67 billion in the first half of 2011 on the back of the opening of Galaxy Macau

Local casino operator Galaxy Entertainment Group’s first-half net income dropped 20.4 percent to HKD 378.3 million from HKD 475 million a year earlier, according to a statement to the Hong Kong stock exchange yesterday.
However, the company controlled by the family of billionaire Lui Che Woo said adjusted first-half earnings before interest, taxation, depreciation and amortisation (EBITDA) jumped 84 percent to HKD 1.8 billion from HKD 990 million in the previous year.
The second quarter of 2011 delivered Galaxy’s 11th consecutive quarter of EBITDA growth. Analysts had expected an EBITDA number around HKD 1.5 billion, according to a Reuters report.
“Spearheaded by StarWorld and the opening of Galaxy Macau, the group delivered revenue of HKD 13.67 billion in the first half of 2011, representing an increase of 60 percent over the first half of 2010. Quarter 2 revenue was HKD 7.9 billion up 72 percent year-on-year,” the company said.
However, first half net profit was dragged down by one-time charges of HKD 800 million linked to the opening of Galaxy Macau in Cotai, said the Hong Kong-listed casino operator.
“I am comfortable saying that the one-offs are legitimate. The stock is going to react favourably to this. The market is going to like this,” said Philip Tulk, Royal Bank of Scotland’s gaming analyst in Hong Kong quoted by Reuters.
Galaxy shares jumped as much as 5.8 percent to HKD 20.2 after the results announcement, before easing to close at HKD 19.48.
Galaxy Macau opened with a 7 percent increase in budget to HKD 16.5 billion and will open the full complement of 2,200 rooms in the last quarter of 2011. “The small variance to budget was primarily caused by an increase in construction labour cost and more construction workers associated with our accelerated rollout program, various enhancements to the resort and small changes in scope,” said the company.
“In just 47 days, Galaxy Macau generated revenue of HKD 2.4 billion and EBITDA of HKD 376 million.”
Galaxy Macau is helping to boost Galaxy Entertainment Group’s gross gaming revenue. The casino operator, whose market value has more than quadrupled in the past year, was second in the gross gaming revenue rankings in July, grabbing a market share of almost 19 percent, according to figures compiled by Macau Daily Times.  
The company ranked only behind SJM Holdings, jumping ahead of Sands China Ltd, Wynn Macau and Melco Crown.

New record on the way

Galaxy Entertainment chief executive officer Francis Lui said yesterday he expected Macau’s gaming revenue to rise by over 30 percent this year.
On Tuesday, Macau’s top gaming regulator Manuel Joaquim das Neves told MDTimes the local industry should close 2011 with a year-on-year revenue growth “above 35 percent”.
According to data compiled by MDTimes, for the month up to August 29 the gaming sector had recorded revenue of MOP 23.2 billion. Considering that the industry is setting a daily average of MOP 711.8 million this year, August is likely to set a new monthly record.
Casino operators also advanced yesterday at the Hong Kong stock exchange as Nomura Holdings Inc. said Macau’s casino revenue will likely rise to a better-than-expected 57 percent in August, to MOP 24.7 billion (USD 3 billion).
Macau’s July gaming revenue rose 48.4 percent year on year to MOP 24.2 billion, the second highest gain this year. The best ever month for Macau’s casinos was May with total revenue of 24.3 billion.
Concerns that global economic woes will affect Macau are justified, say analysts, but most agree that the gaming industry is unlikely to be severely impacted. In a report released on Tuesday, Moody’s said Macau junkets were not heavily reliant on the domestic banking system.
“Although there are concerns that tighter credit restrictions by the central government will slow the country’s economic growth and eventually affect gaming spending, we expect the impact to be modest,” the ratings firm wrote.


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