Galaxy’s market share surges on strong GGR growth, continued momentum expected

J.P. Morgan analysts DS Kim, Mufan Shi and Selina Li recently wrote that the casino operator appeared to be the “biggest share gainer” in the second quarter – propelled by a 7 per cent quarter-on-quarter increase in GGR – reaching 18.9 per cent, up from 17.3 per cent in the preceding quarter. However, the level is still below the 21 per cent observed in 2019.

“The company gained shares in both segments, too. Mass GGR grew 7% q/q (vs. flat for the industry) to its all-time high (+14% above pre-COVID), and its VIP rolling was actually up 20% q/q (vs. the industry’s -15-20% decline) from a low base to reach 26% of the pre-COVID level.” the analysts wrote.

According to them, Galaxy’s stronger-than-expected EBITDA led to an “idiosyncratic profit expansion”, which rose 12 per cent sequentially – in contrast to an average decline of 10 per cent among peers. 

The momentum is forecast to continue into the next quarter, with the gaming operator expected to reach 19.5 per cent market share.

The analysts say this should act as a “cushion for industry-wide uncertainty amid a frustratingly poor macro/consumption backdrop”.

Meanwhile, Seaport Research Partners analyst Vitaly Umansky said in his note that further market share gains had been observed since July, which would push the level further above 19 percent.

At Galaxy Macau, the Cotai gaming operator’s flagship property, the analyst pointed out that the summer season had seen an increase in footfall.

“The weakness in early July is attributable largely to the Euro football championships and the late start to traditional Chinese summer holiday travel,” he said.

Despite a perceived increase in player reinvestment in premium mass, Galaxy has now refocused on mass reinvestment, which the analyst believes would drive further market share and EBITDA gains.

“With a re-focus on sales process and operational execution, we expect share gains to continue at Galaxy Macau over the next few quarters and into 2025,” he wrote.

Umansky also mentioned a “positive government policy attitude” towards the industry and the city from Galaxy’s management.

“The ongoing crackdown on Macau money touts is not having any material impact on the business,” he said. “Most players have access to liquidity and revenues should not be impacted by government initiatives with respect to this activity.”