(Yicai Global) Aug. 26 -- Mr. Lui Che Woo, chairman of Galaxy Entertainment Group, Ltd. [SEHK:00027], believes the gambling market in Macau has been gradually bottoming out during the past two months, and says the company will focus on mass gaming and non-gambling businesses going forward.
Mr. Lui made the statement at a press briefing on the company's interim report for the first half of 2016. He said, Galaxy Entertainment delivered solid financial results, mostly driven by Galaxy Macau with its numerous mass gaming and non-gambling entertainment facilities. Star World Hotel has also been steadily progressing in the transformation toward a mass gaming business, he said.
Mr. Michael Mecca, president of Galaxy Entertainment, also spoke at the meeting, noting that 99 percent of the group's revenue used to come from casinos, but this has fallen to 85 percent today. "The decline in VIP guests has stabilized, but it's still hard to predict how the situation will evolve in the future," he said. He estimated that business transformation in Macau had just started and the proportion of spending by ordinary (i.e. non-VIP) guests to total revenue was expected to further increase.
Regarding Galaxy Project phase three and phase four and the Hengqin Project currently under construction, Mr. Lui said that non-gambling related facilities accounted for 90 percent of the total area of the projects, and that the group will try to attract customers with non-gambling businesses, showcasing its dedication to business transformation and efforts to change the group's old image.
According to the latest earnings results released by the company, in the first half of 2016, Galaxy Entertainment VIP rooms posted a rolling chip turnover of HKD245.8 billion, down 16 percent per year; a profit of HKD9.9 billion, down four percent year on year. On the other hand, its mass gaming revenues totaled HKD6.5 billion, up 22 percent annually; and revenues from non-gambling businesses rose 53 percent to HKD1.3 billion.
The gambling industry in Macau is divided into three businesses: VIP, mass gaming and slot machines, with the last accounting for only an insignificant portion of total revenue. With the slump in the VIP business in recent years, market players believe that the focus of Macau's gaming industry will shift from VIP guests toward mass gaming businesses characterized by small stakes.