CBRE analysts point out in a recent report that Galaxy Entertainment Group (GEG) market share in the Macau SAR gaming and hospitality sector experienced a decline in the fourth quarter of 2023 compared to the same period in 2019.
In the last three months of the year, the company’s Adjusted EBITDA reached HK$2.8 billion ($357.7 million), in contrast to about HK$163 million ($21 million) in negative operation results in the same period of 2022, but almost unchanged from the previous quarter.
According to the CBRE analysis, the company’s Gross Gaming Revenue (GGR) market share stood at 17.5 percent in 4Q23, marking a decrease from 20.7 percent in 4Q19.
Despite this dip in market share, the company’s occupancy rates have remained impressively high, hovering near 100 percent.
Moreover, during the Chinese New Year festivities, the mass gaming drop and revenue surpassed the figures recorded during the 2019 holiday period by a notable margin of 20 percent.
These positive trends have been attributed to continued infrastructure enhancements, notably the opening of the new Macau Barra metro station in December 2023, which is anticipated to drive further recovery and growth in visitor numbers.
The company’s EBITDA recovery has also lagged behind other operators, primarily due to the expenses associated with the opening and operation of Phase 3 amenities.
However, GEG’s management remains focused on reinvesting in assets and enhancing gaming and Food & Beverage offerings, aiming for improved performance in the future. Analysts anticipate that GEG could benefit from the recovery of its base and casual businesses throughout 2024.
Overall, while challenges persist in the Macau sector, with concerns over China’s macroeconomics and consumer spending, analysts remain bullish on the long-term growth potential of GEG due to its strong balance sheet, reinstated dividends, and strategic investments in infrastructure and personnel.
Andrew Lee, an analyst for Jefferies, emphasized Galaxy’s standing as one of the top picks in the sector, citing its attractive product offerings and the anticipated full-year impact from Phase 3 developments. Lee also highlighted an increase in headcount as a positive indicator for Galaxy’s growth prospects.
Despite these optimistic projections, the company’s fourth-quarter group EBITDA margin experienced a slight decrease, dropping to 27.2 percent from 28.7 percent in the third quarter of 2023.
Lee suggests that this decline could be attributed to higher staff costs following significant hires in 2023. The company reported an increase in total headcount to approximately 21,000 after hiring 6,000 staff in 2023, although still below the 2019 level of 22,000.
