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Galaxy to enjoy earnings boost: report

[b]Galaxy Phase II now stands proudly between the east and west towers of Phase I[/b]
Written by Ben Blaschke

Galaxy can expect to see its EBITDA rise 11 percent higher than consensus in 2017, according to a Macau gaming report from Morgan Stanley.

Noting results from the group’s most recent trip to Macau with investors, the report indicated that Galaxy and to a lesser extent Wynn Palace appear to be benefiting most from Macau gaming’s recent recovery with Galaxy continuing to see growth across all segments.

It follows yesterday’s impressive earnings results, which saw profit for the group rise 51 percent in 2016 to HK$6.3 billion, while revenue rose 4 percent to HK$52.8 billion. EBITDA increased 18 percent to HK$10.3 billion.

However, while Galaxy is on the rise, Morgan Stanley’s report amends the outlook for Sands with cannibalization potentially seeing EBITDA down 3 percent on consensus.

“We believe cannibalization of Venetian/ Cotai Central from other Cotai casinos, including Parisian, could continue,” wrote Equity Analysts Praveen Choudhary and Alex Poon. “Galaxy has gained market share in both VIP and mass and 2017 consensus estimates appear too conservative.

“We expect continued ramp at Wynn Palace as mass floor has not been busier and minimum bets have gone up. We think Wynn/Galaxy could take more share from Sands China in 1H17 than consensus expects.”

The report suggested there would be little impact from the proposes smoking ban in VIP gaming areas due to the government relaxing its stance on smoking lounges and potential delays in implementing any changes.

Morgan Stanley expects Macau’s GGR to grow by nine percent in 2017, mass revenue 11 percent and EBITDA 13 percent.