Galaxy earnings to rebound to 2019 levels in 2024, analysts say

Jefferies says the rebound will be driven by the full opening of the company’s phase 3 project.

Macau.- Galaxy Entertainment Group (GEG)’s Phase 3 opening will see its earnings reach levels comparable to 2019. That’s according to investment bank Jefferies. Analyst Andrew Lee says the amenities at Galaxy’s Phase 3 project will be a pivotal differentiator in 2024, primarily due to a shifting customer profile.

It says the project, which saw the openings of the Andaz hotel in September and the Raffles hotel in August will attract younger customers, more women, an increased presence of non-Guangdong players, and more families. The new hotels expanded the total number of hotel rooms to 5,000.

Other factors contributing to the improvement in earnings include Macau’s gross gaming revenue recovery and the resurgence of premium mass tables to pre-pandemic levels after the opening of the Raffles hotel.

Jefferies forecasts the potential for GEG to increase its dividend payout ratio in the medium to long term, supported by a favourable net cash position, reduced capital expenditure, and positive free cash flow.

In the first half of the year, Galaxy posted a profit of HK$2.89bn (US$369.0m), compared to a HK$850.47m loss in the same period of 2022. Revenue was up 141 per cent year-on-year to HK$15.72bn (US$2.04bn) and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) was up 2,193 per cent to HK$4.4bn.

GGR was HK$13.73bn (US$1.75m), up 198.4 per cent year-on-year. Adjusted EBITDA for gaming was up by HK$$63m. Mass GGR was HK$11.2bn, up 194 per cent, rolling chip GGR HK$1.7bn (US$217m), up 140 per cent and electronic GGR HK$780m (US$100m), up 228 per cent.

The Phase 4 project has been rescheduled for 2026 and will provide an additional 1,600 rooms.