COVID-19, VIP collapse impact Galaxy Entertainment Group in 1Q22

Adjusted EBITDA of HK$575 million (US$73 million) was also down 33% year-on-year and 45% on the December 2021 quarter.

The Q1 results included gross gaming revenue of HK$3.4 billion (US$433 million), down 29% year-on-year and 13% quarter-on-quarter, with much of that due to the collapse of Macau’s junket industry. Rolling chip GGR fell 69% year-on-year to $566 million (US$72 million), while mass table GGR was down only 7% on 1Q21 to HK$2.7 billion (US$344 million). Electronic gaming machine (EGM) GGR showed a 25% annual and 2% sequential increase to HK$162 million (US$21 million).

At flagship IR Galaxy Macau, GGR fell 17.5% year-on-year to HK$2.8 billion (US$357 million) – also lower than the HK$3.0 billion (US$382 million) reported in 4Q21 – with Adjusted EBITDA down 5% to HK$724 million (US$92 million).

StarWorld, which no longer offers any rolling chip gaming, felt the effects with GGR plummeting by 65% to HK$420 million (US$54 million). Likewise, Broadway Macao – currently operating as a “self-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 outshine its Macau peers in terms of fiscal 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 liquidity via debt.

The company said its cash and liquid investments were HK$35.0 billion (US$4.5 billion) and net cash was HK$24.5 billion (US$3.1 billion) as of 31 March 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 will, it explained, open progressively based on “prevailing market conditions.”

“We are well positioned to capture mass customers when the market returns as well as MICE business with the opening of the Galaxy International Convention Center,” GEG said.

“Following the closure of the VIP business, we have been reallocating our resources and marketing efforts to the mass-oriented tourists whom appreciate GEG’s extensive array of resort offerings.

“Macau concessionaires continue to work with the Macao Government Tourism Office to actively promote Macau as a safe tourism destination and has hosted a series of roadshows and exhibitions in a numbers 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 an ability to bounce back quickly when travel restrictions were eased, indicating solid pent-up demand. Moreover, we continue to remain optimistic and encouraged that we see strong signs of healthy demand for Macau and are very confident that the leisure and tourism sector will bounce back.”