Macau casino operator Galaxy Entertainment Group (GEG) recorded a 22% fall year on year in net profit in 2010 despite revenue rising by 57.4 % in the same period.
But the fall was chiefly due to GEG buying back debt the company explained.
“A reduction in net profit attributable to shareholders was mainly because of one-time special gain/loss from bond buyback and early note redemption,” Galaxy said in a filing to the Hong Kong stock exchange.
“Excluding those one-time items and accounting valuation of the convertible notes, net profit attributable to shareholders tripled from HK$0.4 billion (US$51 million) in 2009 to HK$1.3 billion (US$167 million) in 2010,” it added.
In a presentation based on its annual report GEG also stated it had: “Strengthened [the] balance sheet by reducing cost of debt and lengthening debt maturity profile from two years at December 2009 to four years at February 2011.”
In 2010 GEG reported revenue of HK$19.26 billion and net profit attributable to shareholders of HK$898 million. This was in comparison to revenue of HK$12.23 billion and net profit of HK$1.15 billion for the twelve month period ended 31st December 2009.
Market estimates had been for net profit in 2010 of HK$1.2 billion said Reuters, quoting Thomson Reuters StarMine, an analytics and equity research service.
Although the year on year fall in net profit was higher than market estimates, analysts remain positive on the company’s prospects. That story includes Galaxy’s entry as a major player in mass market gaming when it opens Galaxy Macau resort on Cotai in mid-May. Its existing property StarWorld and the Galaxy-licensed City Clubs casinos owned by third parties are mainly VIP-focused businesses.
GEG said in its 2010 results it recorded record full year group EBITDA of HK$2.23 billion, up 92% year-on-year, as well as all-time record group EBITDA of HK$625 million in Q4 2010, up 76% year-on-year. The company added this was the ninth consecutive quarter of group EBITDA growth.
Shares in Galaxy have nearly tripled in value over the past 12 months, outperforming rivals Sands China, Wynn Macau Ltd and SJM Holdings Ltd.
Twelve out of seventeen analysts covering the stock have a “strong buy” or “buy” rating, Reuters said quoting Thomson Reuters StarMine. It added there were no sell ratings.
In March up to 27th of the month, Galaxy had 12.3% of the Macau casino market by gross revenue according to analysts.
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