Caixin
Aug 15, 2019 07:45 PM
BUSINESS & TECH

Macau Casino Operator Galaxy Reports 7% Profit Drop

The interior of the Galaxy Macau casino and hotel in Macau, China, on Feb. 24, 2018. Photo: VCG
The interior of the Galaxy Macau casino and hotel in Macau, China, on Feb. 24, 2018. Photo: VCG

Galaxy Entertainment Group Ltd., one Macau’s biggest casino operators, reported its profit dropped 7% in the first half of the year as the world’s richest gambling hub continues its efforts at a recovery after a national crackdown on corruption scared away high-rollers.

The company posted profits of HK$6.7 billion ($850 million) in the first six months on revenue of HK$26.2 billion, according to the group’s financial report filed to the Hong Kong Stock Exchange on Tuesday.

Galaxy’s gross gambling revenue, including from its affiliate City Clubs, was $30.6 billion, down 11% year-on-year, dragged by a plunge in its business catering to the wealthy. The group’s total takings from these kinds of gamblers tumbled 25% to $14.8 billion, while the revenue of its mass market segment — which is mostly made up of casual gamblers and families — rose 8% to $14.6 billion, according to the financial report.

The company’s performance is in line with the overall market in Macau, which saw gross gambling revenue fall 0.5% in the first half of this year, according to data released by the local government.

Spending by high-rollers in the special administrative region dropped 14.5% in the first six months, while mass market revenue rose 17.3%, according to a report released by Hong Kong-based brokerage Guotai Junan Securities Co. Ltd.

Macau’s gambling sector has had to reorient itself toward the mass market ever since the corruption campaign — which kicked off after the 18th National Congress of the Communist Party in 2012 — brought capital restrictions and other measures to combat corruption.

In 2014, 2015 and 2016, Macau’s gambling revenue declined 2.6%, 34.3% and 3.3%, respectively. The industry’s revenue grew 19% in 2017 and 14% in 2018, though that year’s revenue was still less than what it was in 2013.

Francis Lui, Galaxy’s deputy chairman, said the group will continue taking steps to develop its mass market business, with the group’s future projects targeting casual gamblers and non-gambling businesses such as luxury hotels, restaurants and major conferences.

Though trade tensions might dampen spending, the opening of the Hong Kong-Zhuhai-Macau Bridge — which connects the two special administrative regions and Guangdong province — and the continuous growth in mainland affluence, will boost Macau’s development, said Galaxy Entertainment Chairman Lui Che-woo. Lui is the city’s third-richest man with a fortune of 19 billion yuan ($2.7 billion) in 2018, according to Forbes.

Galaxy is one of Macau’s six casino license holders and runs three casinos in the city, including Galaxy Macau, Broadway Macau and StarWorld Macau.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

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