Net Revenue: $10.7 billion, up 11% year-on-year. Adjusted EBITDA: $2.9 billion, up 6% year-on-year, down 7% quarter-on-quarter. Mass GGR: Increased by 13% year-on-year, 1% quarter-on-quarter, reaching 115% of 2019's level. Cash and Liquid Investments: $28.6 billion as of Q3 2024. Interim Dividend: $0.50 per share paid in October. Total CapEx: $1.1 billion for Q3, with $600 million invested in Phase 3 and 4 developments. Total OpEx: Increased by 1.7% compared to Q2. Staff Costs: Decreased by 2% in Q3. Electronic Gaming Volume at StarWorld: Increased by 165% year-on-year.

Warning! GuruFocus has detected 3 Warning Signs with GXYEF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Galaxy Entertainment Group Ltd (GXYEF) reported a net revenue increase of 11% year-on-year, reaching $10.7 billion in Q3 2024. Macau welcomed 9.2 million visitors in Q3, marking an 11% increase year-on-year and reaching approximately 93% of pre-pandemic levels. The group's Mass GGR in Q3 rose by 13% year-on-year, achieving 115% of 2019's level. Galaxy Macau performed exceptionally well, reaching 139% of 2019's level. The company maintains a robust and liquid balance sheet with cash and liquid investments of $28.6 billion as of Q3 2024.

Negative Points

Adjusted EBITDA was down 2% quarter-on-quarter, primarily due to a low win rate in the rolling business impacting EBITDA by $165 million. Adverse weather conditions in southern China and a typhoon in September affected Macau visitor numbers. The company's total OpEx edged up 1.7% compared to Q2, despite a decrease in staff costs by 2%. The reinvestment rate increased due to lower VIP GGR and higher commissions, impacting profitability. The market remains intensely competitive, affecting the company's ability to maintain or grow market share.

Q & A Highlights

Q: Can you provide insights on Galaxy Entertainment's market share and mass GGR trends for October? A: Ted Chan Ying Tat, CFO, explained that October started strong with the Golden Week, which saw a significant boost in visitation and mass table drop, marking some of the highest in the company's history. Despite a quieter market post-Golden Week, Galaxy's market share remained above 20%.

Q: How did Galaxy Entertainment achieve strong non-gaming revenue despite challenges in China's consumption trends? A: Ted Chan Ying Tat noted a 6% sequential increase in non-gaming revenue, driven by increased rental space and resilient rental income structures. The entertainment strategy has also positively impacted both gaming and non-gaming segments.

Story Continues

Q: What factors contributed to the increase in reinvestment rate, and is it sustainable? A: The CFO attributed the rise in reinvestment rate to a low VIP GGR with high commissions and lower-than-expected September volumes. However, he expects this to level off in Q4, maintaining discipline in managing reinvestment levels.

Q: What initiatives are in place to maintain or grow market share in 2025 amid increasing competition? A: Ted Chan Ying Tat emphasized the focus on product and service quality, new offerings like Capella targeting premium customers, and enhanced entertainment strategies. Phase 4 developments will further bolster their market position.

Q: How does Galaxy Entertainment plan to address the softness in the ultra-high-end market segment? A: The CFO acknowledged the anticipated seasonal slowdown but highlighted initiatives like entertainment-driven events to mitigate this. Upcoming performances and events are expected to drive visitation and engagement.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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