Galaxy Entertainment Group has reiterated its long-term confidence in Macau, while at the same time acknowledging that short-term challenges are largely unquantifiable at the moment as the COVID-19 outbreak continues to affect visitation.  

Speaking on a live webcast, GEG vice chairman Francis Lui said: “It is very difficult for us to foresee the impact on our profits at this point but it won’t be small.” Still, he added that he was seeing signs of stabilization on the mainland. “If that’s the case and if package tours and IVS visas resume I’m confident we will be able to resume our growth pace,” Lui said.  

Earlier in the day, GEG announced its financial results for 2019, which showed Q4 results that were largely in line with analyst expectations.  

Net revenue for the quarter fell 8% YoY while adjusted EBITDA fell 6% YoY to $4.1 billion. That performance was made better by a good win-hold rate: Normalized Q4 2019 adjusted EBITDA fell 9% YoY. 

Analysts at Sanford Bernstein noted that Galaxy lost market share in Q4 on YoY basis (although it stabilized sequentially), which was expected, due to ramp up of newer Cotai properties such as Melco’s Morpheus Tower and MGM Cotai. Galaxy’s total GGR market share stood at 20.6% (vs. 20.9% in 2019 Q3 and 22.3% 2018 Q4), VIP GGR market share was estimated at 25% (vs. 25% 2019 Q3 and 26% 2018 Q4), and total mass GGR market share was estimated at 18% (vs. 18% in 2019 Q3 and 19% in 2018 Q4).  

With net cash on its balance sheet of more than $50 billion, its no wonder GEG is positive about finishing off Phase 3 and 4, while continuing to plan for its Hengqin project and pursue an IR project in Japan.  

However, the company management did not try to put a gloss on the current situation. Noting that 2019 had been impacted by the China-US trade war, which should improve this year after the signing of the January agreement between the two governments, and reminding of the imminent opening of the Hengqin Railway Station, Galaxy said, “Macau may continue to experience geo-political and economic challenges that may have an impact on consumer confidence in 2020.”  

Pointing out the obvious, that neither GEG nor anyone else can predict what will happen next in the battle against the virus, the company added that, “At this point in time we wish to highlight that a prolonged coronavirus crisis may have a material effect on our 2020 financial results and our development projects in Macau.” 

Looking longer term, the company said, “GEG will continue to focus on driving every segment of our business by allocating resources to their highest and best use. Mainland China has significant demand for leisure, tourism and travel and GEG is uniquely positioned to capitalize on this future growth potential having the largest development pipeline in Macau with Phases 3 & 4. 

“Our strong and healthy balance sheet allows us to return capital to shareholders through special dividends and fund both our Macau development pipeline and international expansion opportunities. These include Cotai Phases 3 & 4, Hengqin and Japan.”  

On the new phases, Lui said construction was “re-accelerating” since the resumption of casino operations on February 20. 

Phases 3 & 4 include approximately 4,000 hotel rooms and villas, including family and premium high-end rooms, 400,000 square feet of MICE space, a 500,000 square feet 16,000-seat multi-purpose arena, F&B, retail and casinos. 

Lui said most workers undergoing quarantine in Zhuhai could return in the next few days, which would enable construction to resume in “full force”. 

He also reiterated GEG’s commitment to staff and suppliers. “Our group has no plans for cutting staff or anything along those line,” he said. “What is most important is that we unite and not be too calculating. We are fully confident the virus will be controlled.” 

GEG also said it had waived fixed rental costs for shops in its properties in February, to assist local SMEs, with other measures to be announced in the future. 

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