GALAXY 3Q CONF CALL NOTES

An in-line quarter negatively impacted by mix

HIGHLIGHTS FROM THE RELEASE

  • GEG Adjusted EBITDA of HK$1.793BN
  • Galaxy Macau Adjusted EBITDA of HK$973MM and revenue of $6,390MM
    • VIP RC: HK$163BN; win: $4.9BN
    • Mass drop: HK$5BN; win: HK$1BN
    • Slots handle: HK$4BN; win: $262MM
    • US GAAP Margin of 23%
    • 2,100 rooms open in 3Q, 91% occupancy
    • "All 2,200 rooms and Macau’s first mega 3D Cineplex to open in late Q4 2011"
  • Starworld Adjusted EBITDA of HK$779MM and HK$6.4BN of revenue
    • VIP RC: HK$180BN; win: HK$5.9MM
    • Mass drop: HK$2.3BN; win: HK$433MM
    • Slot handle: HK$917MM; win: HK$58MM 
    • US GAAP margin 21%
  • City Club Adjusted EBITDA of HK$32MM
  • Construction material Adjusted EBITDA of HK$117MM
  • Balance sheet: Cash of HK$7BN 

CONF CALL NOTES

  • Galaxy Macau
    • Opened 3 new VIP rooms at Galaxy Macau in the quarter for a total of 10 now
    • Wave pool had 2,000 visits per day in August
    • Hold challenges impacted their results by HK$60MM (bad mix) - would have been $1,030MM
  • Starworld also had an unfavorable mix of RC vs RevShare business which also negatively impacted their business but didn't quantify it.
  • City Clubs's result decline was a result of hold challenges and YoY volume declines

Q&A

  • 95% gaming and 5% non-gaming revenue split at both Starworld & GM
  • Will likely make an announcement sooner rather than later on PH2 of GM
  • GM's hold was fine but the mix was unfavorable 
  • Added a slot marketing team, new signage around the property at Starworld are some of their new changes that are driving mass
  • Mass business is growing at Galaxy Macau. Their brand awareness is growing. As their dealers gain experience, their Mass hold has increased.  Busing program is successful. 
    • Growing their database is important to grow the Mass business at GM - it just takes time to ramp. Shuttle bus and day tripper business are growing. 
  • The addition to fixed cost isn't as high as you would think as the additional hotel rooms come online; it's mostly just variable costs