Mostly in-line quarter on lowered expectations. Only operator to grow VIP YoY in Q3
CONF CALL
- Perfect storm in Macau
- Only company in Macau to report gains in VIP revenues and volumes
- Galaxy Macau
- VIP bad luck reduced EBITDA by HK$50m
- Win/table/day +27% YoY
- Shifted 10% of mass capacity to VIP rooms
- Slot: reported record win
- LTM ROI: 60%
- Starworld
- Win rate: 2.66%
- No bad luck impact
- Closed 2 VIP rooms in 3Q and additional 2 VIP rooms in October (15% of capacity) to reallocate tables to higher yielding use (mix of VIP and MASS).
- LTM ROI: 108%
- Galaxy Macau PH2: on budget, on schedule for mid-2015, excited to introduce Ritz Carlton and JW Marriott hotels to the market
- Grand Waldo: on schedule; will unveil plans in January; aim to re-launch in early 2015
- Galaxy Macau Cotai 3/4: will double area of Ph1/2 to 2 million sq meters
- Debt: $240m at end of 3Q 2014
Q & A
- Smoking ban: have fully complied with regulations
- Mass premium tables reclassification into VIP: working close with govt on clarity on this issue. There is cash play in VIP direct rooms.
- Starworld/Galaxy Macau 99% occupancy: everyone is running near full capacity; market is undersupplied
- Japan/Taiwan/South Korea: actively exploring partnerships in Japan
- Corporate expense: will see some lift when PH2 opens but trying to do things as efficiently as they can
- Junkets: large guys are getting better; smaller guys are experiencing challenges
- Galaxy Macau PH2:
- Will have additional smoking chambers in mass floors (have 4 in PH1 and developing some in PH2 to comply with regulations)
- Retail: Fully leased; rents are healthy
- VIP rooms Galaxy Macau: still sees strong demand and into PH2.
- Combination of new and existing junkets into PH2
- Will add 6-8k new employees (4-6 wks from openings); quite confident in getting the necessary labor
- Table allocations for PH2 and Grand Waldo: have certain expectations; still in dialogue with govt