GALAXY ENTERTAINMENT GROUP Q2 & INTERIM RESULTS 2019
Tokyo, 13 August 2019 – Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported results for the three months and six months periods ended 30 June 2019. (All amounts are expressed in Hong Kong dollars unless otherwise stated)
Q2 & INTERIM 2019 RESULTS HIGHLIGHTS
GEG: Solid Mass Performance, Challenging VIP Segment
- 1H Group Net Revenue of $26.2 billion, down 7% year-on-year
- 1H Group Adjusted EBITDA of $8.3 billion, down 4% year-on-year
- 1H Net Profit Attributable to Shareholders (“NPAS”) of $6.7 billion, down 7% year-on-year
- Q2 Group Net Revenue of $13.2 billion, down 5% year-on-year and up 1% quarter-on-quarter
- Q2 Group Adjusted EBITDA of $4.3 billion, flat year-on-year and up 9% quarter-on-quarter
- Played lucky in Q2 which increased Adjusted EBITDA by approximately $349 million, normalized Q2 Adjusted EBITDA of $4.0 billion, down 11% year-on-year and up 3% quarter-on-quarter
- LTM Adjusted EBITDA of $16.5 billion, up 1% year-on-year
Galaxy Macau™: Solid Mass Performance, Property Enhancement Program on Track
- 1H Net Revenue of $18.8 billion, down 5% year-on-year
- 1H Adjusted EBITDA of $6.3 billion, down 3% year-on-year
- Q2 Net Revenue of $9.5 billion, down 4% year-on-year and up 3% quarter-on-quarter
- Q2 Adjusted EBITDA of $3.2 billion, flat year-on-year and up 7% quarter-on-quarter
- Played lucky in Q2 which increased Adjusted EBITDA by approximately $253 million, normalized Q2 Adjusted EBITDA of $3.0 billion, down 11% year-on-year and flat quarter-on-quarter
- Hotel occupancy for Q2 across the five hotels was virtually 100%
StarWorld Macau: Solid Mass Performance, Property Enhancement Program on Track
- 1H Net Revenue of $5.7 billion, down 8% year-on-year
- 1H Adjusted EBITDA of $1.9 billion, down 5% year-on-year
- Q2 Net Revenue of $2.8 billion, down 10% year-on-year and down 8% quarter-on-quarter
- Q2 Adjusted EBITDA of $943 million, down 4% year-on-year and down 1% quarter-on-quarter
- Played lucky in Q2 which increased Adjusted EBITDA by approximately $92 million, normalized Q2 Adjusted EBITDA of $851 million, down 14% year-on-year and down 3% quarter-on-quarter
- Hotel occupancy for Q2 was virtually 100%
Broadway Macau™: A Unique Family Friendly Resort, Strongly Supported By Macau SMEs
- 1H Net Revenue of $298 million versus $273 million in 1H 2018
- 1H Adjusted EBITDA of $21 million versus $15 million in 1H 2018
- Q2 Net Revenue of $147 million versus $131 million in Q2 2018 and $151 million in Q1 2019
- Q2 Adjusted EBITDA of $6 million versus $2 million in Q2 2018 and $15 million in Q1 2019
- Played lucky in Q2 which increased Adjusted EBITDA by approximately $4 million, normalized Q2 Adjusted EBITDA of $2 million versus $4 million in Q2 2018 and $11 million in Q1 2019
- Hotel occupancy for Q2 was virtually 100%
Balance Sheet: Maintains a Healthy and Liquid Balance Sheet
- Cash and liquid investments were $50.4 billion and net cash of $43.9 billion as at 30 June 2019
- Debt of $6.5 billion as at 30 June 2019 primarily associated with treasury yield management program
- Paid the previously announced special dividend of $0.45 per share on 26 April 2019
- Subsequently announced another special dividend of $0.46 per share to be paid on or about 25 October 2019
Development Update: Continue to Pursue Development Opportunities
- Continue to progress with the previously announced $1.5 billion renovation enhancement program in both Galaxy Macau™ and StarWorld Macau, short term this has caused some disruption
- Cotai Phases 3 & 4 – Continue with development works for Phases 3 & 4, with a strong focus on non-gaming, primarily targeting MICE, entertainment, family facilities and also including gaming
- Hengqin – Refining our plans for a lifestyle resort to complement our high-energy entertainment resorts in Macau
- International – Continuously exploring opportunities in overseas markets, including Japan
Dr. Lui Che Woo, Chairman of GEG said:
“Today I am pleased to report the second quarter and half year results of the Group in 2019. This year is an important year for China and Macau with a particular focus on three major events. These include celebrating the 70th anniversary of the founding of the People’s Republic of China, it is also the 20th anniversary of the return of Macau to China. Further, we look forward to the election of the next Chief Executive in twelve days on August 25th.
For first half of 2019, Group Net Revenue decreased 7% year-on-year to $26.2 billion and Adjusted EBITDA decreased 4% year-on-year to $8.3 billion. In Q2 2019, the Group delivered Adjusted EBITDA of $4.3 billion, an increase of 9% quarter-on-quarter. Our balance sheet continued to be solid with total cash and liquid investments of $50.4 billion and net cash of $43.9 billion. Our balance sheet and cash flow from operations allows us to return capital to shareholders through dividends, fund our development pipeline and our pursue international expansion ambitions.
On 26 April 2019 we paid a special dividend of $0.45 per share and today we are pleased to announce another special dividend of $0.46 per share payable on or about 25 October 2019. These dividends demonstrate our confidence in the longer term outlook for Macau and for the Company.
The overall market in Macau remains relatively stable despite a decrease in VIP volumes due to increasing regional competition, ongoing trade tensions and a slowing Chinese economy. We continue to reallocate our resources to the highest and best use and focus on growing the higher margin Mass business.
We have continued to make good progress with our previously announced $1.5 billion property enhancement program. We believe these property enhancements will ensure the continuing attractiveness and competitive position of both Galaxy Macau™ and StarWorld Macau. In the shorter term some customer disruption will occur but medium term the program will create shareholder value.
Furthermore, we continue our construction works in Cotai Phases 3 & 4 and review international expansion opportunities on a case by case basis. In Japan we continue to build relationships with the community through activities such as sponsoring the EUROJAPAN CUP 2019 and the Japan- Macau Integrated Resort Management Mentorship Pilot Scheme in conjunction with the Macau University and Toyo University. In the medium to longer term, we remain confident in the outlook for Macau due to the increasing wealth of the middle class in Mainland China, that will in turn result in the growth of demand for tourism, leisure and travel.
We are pleased with the opening of Hong Kong-Zhuhai-Macau Bridge and look forward to the opening of Guangzhou-Zhuhai Intercity Railway expansion line to Hengqin which will make Cotai even more accessible. With the continued opening of infrastructure that allows easier access to Macau and the implementation of the Greater Bay Area integration plan we believe that this will
further facilitate the flow of people, logistics and capital within Macau, Hong Kong and the nine cities of southern Guangdong.
We do acknowledge in the shorter term the continued discussions on international trade can have an impact on consumer sentiment and spending habits. We remain committed to support the Macau Government’s vision to develop Macau into a ‘World Center of Tourism and Leisure’.
Finally, I would like to thank all of our team members who deliver ‘World Class, Asian Heart’ service each and every day and contribute to the success of the Group.”
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