Galaxy Entertainment Group Limited

Galaxy Entertainment reported Q4 2023 EBITDA of $2.8 billion, versus a loss of $163 million in the same period last year, and said EBITDA was essentially flat quarter on quarter. Macau market GGR in Q4 was $52.5 billion, up 11% quarter on quarter. Visitor arrivals in Q4 were 5.7 million, up 383% year on year, and full-year 2023 visitor arrivals were 28.2 million. Management said mass revenue moved from 67% of 2019 levels at reopening to 107% in Q4, while Galaxy Macau mass business reached 126% of 2019 levels and StarWorld was about 75%. Cash and liquid investments were $25 billion at December 2023, with net cash of $23.5 billion. Guidance/commentary included 2024 visitor arrivals forecast by MGTO at 34 million, 2024 capex around HKD 5.1 billion for Phase 4 plus less than $1 billion additional for other items, and total 2024 government-related commitment described as a little more than $3 billion in aggregate. Management also said Phase 4 is scheduled to complete in 2027, and the 100-room Phase 3D hotel is targeted to open in 2025.

The lead commentary emphasized confidence in Macau’s recovery and a belief that the market is moving toward a more sustainable mass- and premium-mass-led model. Management said Galaxy is investing in resorts, entertainment, and non-gaming to expand the addressable market and convert more non-gaming visitors into gaming customers. Tone-wise, the message was constructive but measured, with repeated comments that the company is timing openings and upgrades to market demand.

Ted Chan highlighted that the quarter benefited from a broad Macau rebound, but also noted a $103 million EBITDA drag from being unlucky in Q4. He pointed to capital spending of about $1.4 billion in Q4 and $5.5 billion for 2023, with 2024 capex around HKD 5.1 billion for Phase 4 plus less than $1 billion additional for other upgrades. On liquidity, he said cash and liquid investments were $25 billion and net cash was $23.5 billion at year-end. He also said staff were at 93% of 2019 levels and staff costs were around 75% of OpEx, while 2023 non-gaming commitments ended up roughly 50-50 between OpEx and CapEx after initially being planned as two-thirds OpEx and one-third CapEx.

Analysts focused heavily on market-share softness, asking whether the recent decline below 18% was structural and how Galaxy planned to regain share. Management said it did not view the decline as a fundamental shift in player preference, but rather as a technical issue and a need to improve sales, host coverage, floor configuration, and technology such as RFID and smart-chip-type tools. Questions also covered premium-mass vs grind/base mass recovery, with management saying premium mass is outperforming base and casual mass, and that 2024 should benefit as those lower-end segments recover. Other questions addressed the timing of Phase 3D and Phase 4, the mix of CapEx and OpEx commitments, and whether more tables could be granted; management said it has not heard anything about table increases yet, but would ask for more if allowed.