COVID-19, VIP collapse impacts Galaxy Entertainment Group in 1Q22
Galaxy Entertainment Group reported a 20% year-on-year and 14% sequential decline in group-wide net revenue to HK$4.1 billion (US$522 million) in 1Q22, as outbreaks of COVID-19 in mainland China and subsequent travel restrictions rolled back many of the gains the company had made towards the end of 2021.
Adjusted EBITDA of HK$575 million (US$73 million) was also down 33% year-on-year and 45% from the December 2021 quarter.
The first-quarter results included gross gaming revenue of HK$3.4 billion ($433 million), down 29% year-on-year and 13% quarter-on-quarter. the other, largely due to the collapse of Macau’s junket industry. Rolling chip GGR fell 69% year-over-year to $566 million (US$72 million), while mass table GGR fell only 7% in 1Q21 to 2, HK$7 billion (US$344 million). Electronic gaming machine (EGM) GGR grew 25% year-on-year and 2% sequentially to HK$162 million (US$21 million).
At IR flagship Galaxy Macau, GGR fell 17.5% year-on-year to HK$2.8 billion (US$357 million) – also below HK$3.0 billion (US$382 million). US dollars) reported in 4Q21 – with Adjusted EBITDA down 5% to HK$724 million ($92 million).
StarWorld, which no longer offers rolling chipsets, felt the pinch with a 65% drop in GGR to HK$420 million (US$54 million). Similarly, Broadway Macau – currently operating as a “health management hotel” – recorded no gaming revenue for the period with an adjusted EBITDA loss of HK$17 million (US$2 million) .
Despite the difficult quarter, GEG continues to outperform its peers in Macau in terms of budget management and remains the only one of the six concessionaires to have remained self-sufficient throughout the COVID-19 pandemic without the need to raise cash through debt.
The company said its cash and liquid investments were 35.0 billion HK dollars ($4.5 billion) and its net cash was 24.5 billion HK dollars ($3 .1 billion) as of March 31, 2022.
GEG also expressed confidence in its prospects, although it has yet to confirm an opening date for its now “effectively completed” Galaxy Macau Phase 3 expansion project. Facilities, he explained, will gradually open based on “prevailing market conditions.”
“We are well positioned to capture mass customers when the market returns as well as MICE activities with the opening of the Galaxy International Convention Center,” GEG said.
“Following the closure of the VIP business, we have reallocated our resources and marketing efforts to mass tourists who value GEG’s wide range of resort offerings.
“Macau dealers continue to work with the Macau Government Tourism Office to actively promote Macau as a safe tourist destination and have held a series of tours and exhibitions in a number 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 its ability to rebound quickly when travel restrictions were eased, indicating strong pent-up demand. Additionally, we remain optimistic and encouraged that we are seeing solid signs of healthy demand for Macau and are very confident that the leisure and tourism sector will rebound. »