Galaxy in line with Street and us for Q2. More chatter regarding higher rebates in the QA and while Galaxy wouldn't deny it is happening in the market, they are not participating.




  • Headwinds: soft landing in China, World Cup and poor VIP luck negatively impacted results by HKD225 million
  • Pursuing opportunities beyond Macau
  • Additional special dividend in October 2014 of HKD0.45/share 
  • GGR +16% YoY, market leading VIP +15% revenue growth, hold 2.9%, bad luck HKD225 million
  • Mass +16% YoY
  • Management is focused on balancing margin against achieving the highest possible absolute HKD EBITDA
  • Manage table mix every day

Galaxy Macau

  • EBITDA up due to VIP strength, VIP +40%, hold 3.16%; lower VIP hold given historical property performance had a HK$75m impact on EBITDA
  • Mass +19% despite table shift to VIP
  • Hotel occupancy 98% 
  • 31% US GAAP margin
  • Opened two new VIP rooms in April, will add 2 VIP rooms in October 


  • 5% decrease QoQ due to worst VIP luck in company history
  • VIP revenues -11%, hold 2.53%, if hold adjusted at 2.98% then +HKD150 million higher EBITDA
  • Mass +28% 
  • Hotel occupancy 98%
  • EBTIDA margin 24% US GAAP 
  • Will relaunch new VIP room before year end


  • Cotai Phase 2: on budget and timeline mid 2015
  • CapEx spend HKD7.3 billion of total plan HKD19 billion, spent HKD1.4b in Q2
  • P3 and P4 finalized in late 2014 will double space
  • Grand Waldo: moving forward plans in Q4 2014 and relaunch in 2015
  • Henquin still working on plans, will support Macau and Cotai plans
  • Pursuing opportunities across Asia, respectful of cultures
  • Balance sheet end of Q2: Cash 14.4 billion; Debt 348m



  • VIP Market today, real time - turning around?  Feel growth of VIP business was as expected for GEG, remain confident VIP market will continue to grow at high single digit rate.
  • HKD125 million tax expense was dividend related. Is also a four-year prepayment, will be HKD120-130 million and accrue over four years
  • Accrual for employee bonuses - paid normal wage increases, plus incremental one month, plus share award for staying over three years, then receive three months salary in stock = +/- 10% to 15% of base wage increase.  But cash and non-cash component so 100-150bps impact to margin.  Approx HKD700 million impact per year, so about HKD150 million per quarter, no catch up.
  • Charitable Foundation accounting - HKD 300 million commitment this year and add'l 100m in subsequent years.  Cash would be a charge to P&L.
  • Margins increase due to optimization of segments on the floor
  • VIP business - look to grow with high quality partners; will add before year end
  • Starworld - current reposition of VIP room and new restaurant will be completed before year end 2014. 
  • Grand Waldo relaunch will include gaming tables and will target mass market.  Plans will be presented in Q4, will be a unique offering and very exciting.
  • Operators increasing rebate in premium mass? - Galaxy not involved in driving incentive, rebates or other programs which reduce margin.
  • Smoking ban changes - rules debuted on October 6 and expect their properties will be fully compliant with smoking rooms on mass floors as well as smoking areas in private areas.   Expect marginal impact and not long lasting negative impact.
  • Phase 2 headcount - will need 7,000 to 8,000 additional people. 
  • Mass Market trends - saw a pick up following World Cup, but still seeing a negative economic impact to growth, optimistic for October Golden Week. 

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