Galaxy Entertainment triple profits in 2011

 

 

Galaxy Entertainment Group said on Thursday annual net profit jumped more than three-fold, although just short of expectations, as wealthy Chinese flocked to its new $2 billion casino, the only one to open in Macau last year.

A former Portuguese enclave that relies heavily on gaming revenues, Macau has remained insulated from weakness in the global economy with mainland gamblers continuing to surge into the only place where they are allowed to legally gamble at casinos.

Galaxy has seen its shares rocket 73 percent higher in past 12 months, outperforming most of its peers including a 10 percent gain for Wynn Macau Ltd.

“We had a record breaking year in many respects with the opening of Galaxy Macau. We really believe the best is yet to come for Galaxy Entertainment,” Chief Financial Officer Robert Drake said.

Galaxy, a $10 billion company controlled by Hong Kong property and construction tycoon Lui Che Woo and 13 percent owned by European private equity firm Permira, reported net profit of HK$3.0 billion ($386.5m US) for 2011.

That was up from HK$898 million a year earlier although shy of a forecast of HK$3.3 billion ($425m US) from Thomson Starmine, with analysts attributing the shortfall to bigger-than-expected losses on changes in assessing the fair value of financial instruments.

Themed as a golden turreted palace and situated next to Sheldon Adelson’s gondola-filled Venetian property, Galaxy’s new resort helped its Macau market share surge to 22 percent in October, making it the second-largest operator after Macau pioneer SJM Holdings Ltd.

That market share has since fallen to 17 percent in February, a level analysts expect it to keep despite the opening of a new Adelson’s casino in April.

They remain bullish on the stock due to still buoyant demand from China’s burgeoning middle class who remain eager to spend heavily inside Macau’s casino fortresses.