Galaxy Entertainment Group: Q3 Impacted by Casino Closures
Galaxy Entertainment Group (GEG) filed to the Hong Kong Exchange an announcement on certain unaudited key performance indicators for the quarter that ended on September 30, 2022.
Revenue Slumped, Outperformed Industry
GEG’s announcement revealed that the company and its subsidiaries registered in the third quarter of 2022 group net revenue of HK$2 billion ($255 million), down 52% when compared to the previous comparable period in 2021 and down 16% when compared on a sequential basis.
Commenting on the results, Dr. Lui Che Woo, chairman of the Board of Directors at GEG, pointed to the pandemic-related restrictions which transitioned from Q2 into Q3 and forced casinos to close for 12 days during the quarter as the main reason behind the slump in revenue as restrictions and closures impacted visitation to casinos.
According to the statistics provided by the city’s gaming regulator, Macau’s Gross Gaming Revenue (GGR) for Q3 2022 was HK$5.4 billion ($688.5 million), down 70% year-over-year and down 35% quarter-over-quarter as the number of total visitors, 898,998, was down 51% when compared to Q3 2021 and down 43% when compared to Q2 2022.
Group adjusted EBITDA in Q3 2022 was negative HK$581 million ($74 million) as compared to HK$503 ($64 million) in Q3 2021 and HK$20 million ($2.55 million) in the previous quarter of 2022.
Adjusted EBITDA in Q3 was negative at all three Macau properties, Galaxy Macau, StarWorld Macau and Broadway Macau, while hotel room occupancy varied between 20% and 26%.
For the twelve months to September 30, 2022, adjusted EBITDA was HK$653 million ($83.2 million), down 81% when compared to Q3 2021 and down 62% from Q2 2022.
During the reported quarter, GEG played unlucky in its gaming operations, which impacted adjusted EBITDA by approximately HK$20 million ($2.55 million). Normalized Q3 2022 adjusted EBITDA was negative HK$561 million ($71.5 million), versus HK$483 million ($61.6 million) in Q3 2021 and negative HK$408 million ($52 million) in Q2 2022.
Strong Balance Sheet, Debt Unchanged
On the balance sheet, Woo commented that it “remains liquid and healthy,” boasting cash and cash equivalents of HK$22.5 million ($2.86 billion) and net cash of HK$19.3 billion ($2.46 billion) at the end of the quarter.
“Core debt remains relatively unchanged at HK$0.3 billion,” he continued, pointing to the flexibility the business has in managing its operations and supporting “ongoing development initiatives.”
Looking into the near future, Woo noted the reopening of Macau’s borders to 41 foreign countries on September 1, the resumption of E-visas effective November 1, and the expected resumption of package tours as positive industry developments that will drive up visitation numbers and profitability for the company
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