Macau gaming operator Galaxy Entertainment Group (GEG) is set to report weaker-than-expected performance for 1Q25, with analysts projecting a 1 percent quarter-on-quarter decline in gross gaming revenue (GGR).
According to Jefferies’ latest projections, GGR for the first quarter of 2025 is expected to reach HK$10.9 billion ($1.4 billion), a decrease from the previous quarter. This drop in GGR is attributed to several factors, including weaker-than-anticipated performance in Average Daily Revenue (ADR) and external challenges within the Macau gaming sector.
Despite a slight increase in ADR, which is projected to rise by 1 percent quarter-on-quarter to MOP121 million ($15.1 million), the industry-wide ADR is expected to increase by 3 percent from 4Q24. As a result, GEG’s overall performance is expected to fall short of market expectations.
The gaming giant’s lower-than-expected ADR can be partly explained by ongoing challenges in attracting tourists to Macau, as well as sentiment issues within mainland China. During the critical post-Chinese New Year period, tourist arrivals were down by 8 percent, which negatively affected GEG’s revenue per day. This trend points to a broader issue in the recovery of Macau’s tourism and gaming industry, even as the region continues to rebuild from the pandemic’s effects.
While GGR is projected to decline, the company’s performance in the VIP gaming segment provides some positive news. Jefferies believes that this strong showing in the VIP segment could partly offset the overall GGR decline, offering some resilience amid challenging market conditions.
Moreover, analysts Anne Ling and Jingjue Pei project GEG’s normalized adjusted EBITDA to fall by 4 percent quarter-on-quarter to HK$3.14 billion ($405 million), further emphasizing the softer-than-expected performance in the first quarter. However, Jefferies remains optimistic about the company’s future prospects, maintaining a “Buy” rating with a price target of HK$44 ($5.67), based on the company’s long-term potential.
GEG is advocating the annual 2025 general meeting on May 8th, which will consider the audited financial statements and the re-election of directors of the board.
