Galaxy Entertainment Q3 earnings dip to HK$2.1 bln

Broadway Macau, which does not have a VIP component, recorded revenue of HKD189 million for its first full quarter of operation, including HKD57 million of non-gaming revenue. This period includes Golden Week holidays in China.

On a quarterly basis, revenue dropped 7%.

Reflecting the Macau market’s overall trends, Galaxy Macau’s VIP revenue was down 38% year-on-year and down 4% from Q2.

Galaxy is making a transition into the growing mass gaming market from the volatile, declining VIP gaming business.

Based in Las Vegas, Wynn is a developer, owner and operator of destination casino resorts. (NYSE:LVS), and Wynn Resorts, Limited (NASDAQ:WYNN) shares jumped on the news that Macau earnings will beat estimates in October.

Wynn Resorts (WYNN – Get Report) stock is increasing by 1.35% to $72.16 in early afternoon trading on Tuesday, as many stocks within the casino sector gain after Macau reported higher than expected gaming revenue.

Casino operators in Macau have been adjusting to the relative advance of the mass segment.

If the government does grant a few 350 gaming tables to the two operators in the coming weeks, added to the 150 given to Galaxy Phase II earlier this year, the total number of new table approvals in 2015 would total 500 to date.

Revenue during the three months ending September 30 came to HKD12.3b (US $1.59b), down 29% year-on-year but up 5% sequentially, while adjusted earnings fell 36% to HKD2.1b ($271m), slightly above analysts’ forecasts. However EBITDA has declined 37% YoY. Earnings would have been around HKD131m higher had the gaming tables at all three GEG properties not “played unlucky” during the quarter.

The Galaxy Macau casinos adjusted EBITDA was down 30 percent year on year and rose 19 percent from the second quarter. Revenue at the luxury property amounted to HK$8.7 billion for the reported period, down 22% year-on-year.

Macau’s casino industry lost over $100 billion during the last 18 months due to the anti-corruption crackdown which scared away high-rollers and caused a major slump in the gambling market in Macau. When compared to the same period in 2014 the price of the average hotel room dropped by 5.4% and casinos might have to drop their prices even further as gamblers from Mainland China have shown a preference of travelling to neighbouring countries like the Philippines, South Korea and Vietnam were gambling laws are a lot more friendly.

Unlike Melco Crown’s (MPEL) brand-new Studio City or Wynn Resorts’ (WYNN) Wynn Palace, Galaxy’s Phase 2 is only an addition to an existing casino.