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