the Macau casino operator founded by billionaire Lui Che Woo, reported quarterly earnings above analyst estimates as Chinese tourists boosted spending in the world’s biggest gambling hub.
Adjusted earnings before interest, taxes, depreciation and amortisation, or adjusted Ebitda, rose 18 percent to HK$3.02 billion ($389 million) for the second quarter ended June, Galaxy said in a stock exchange statement today. That compares with a median estimate of HK$2.88 billion from nine analysts compiled by Bloomberg News.
New attractions, increased hotel supply and an improved rail connection are drawing more mainland Chinese visitors to Macau, the only place in China where casino gambling is legal. Galaxy is expanding in the city’s Cotai area, the Asia’s equivalent of Las Vegas strip, to compete with rivals including Sands China Ltd. (1928), whose profit tripled in the second-quarter.
First-half net income increased 35 percent to HK$4.6 billion.
Galaxy received government approval earlier this year to add 50 gaming tables at its flagship Galaxy Macau casino in Cotai.
Galaxy lost 1.1 percent to HK$43.5 at the midday break of Hong Kong trading. The benchmark Hang Seng Index fell 1.5 percent.
The Hong Kong-based company in May said it will pay HK$3.25 billion for the Grand Waldo complex in Macau, which includes a spa, casino and hotel, to increase its presence in Cotai.
It’s also boosting the budget for Galaxy Macau’s second-phase expansion by HK$3.6 billion to HK$19.6 billion to double the size of its Cotai resort that opened in May 2011.
The phase-two expansion, which the company has started, will add as many as 500 gaming tables and 1,300 rooms from the JW Marriott and Ritz-Carlton hotels by 2015.
Galaxy is planning to spend up to HK$60 billion to begin the third and fourth phases of the project as early as the end of this year and begin operations from 2016 through 2018.
Gross gaming revenue in Macau is expected to grow 17 percent to $44.5 billion from $38 billion last year, according to Deutsche Bank AG estimates.
Galaxy's share has slipped since earlier days of galaxy cotai, but phase 2, combined with synergies with Grand Waldo, which is adjacent to Galaxy's large land grant on cotai, should give them some critical mass of their own and allow them to better capture some "2nd visit" patronage leakage that currently heads down to the center of cotai.