Macau casino operator Galaxy Entertainment Group reported a HK$2.8 billion (US$361 million) loss for the year’s first half on Thursday, reversing a profit of HK$6.7 billion made in the same period a year ago.
The company blamed the absence of tourists amid the coronavirus pandemic for the loss. “Covid-19 has had an adverse impact on our financial results in [the second quarter] and the first half of 2020, as mainland China, Hong Kong and Macau faced travel restrictions and social distancing,” Lui Chee-woo, the company’s chairman, said in a filing to the Hong Kong stock exchange. “These restrictions resulted in a significant reduction in visitor arrivals and subsequent decline in revenue.”
Galaxy Entertainment’s revenue declined by more than three-fourths to HK$6.2 billion from HK$26.2 billion in the same period last year. Its shares closed 0.42 per cent lower at HK$59.25 each on Thursday.
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“We do acknowledge it is hard to determine the speed of recovery with anticipated progressive opening of travel restrictions and expected social distancing within our resorts. Further, we are also mindful that consumer sentiment has been impacted by a slower global economy, ongoing trade tensions and currency fluctuations, among others. These events have been impacting consumer sentiment and subsequent spending habits,” the company said.
The easing of travel restrictions offers a glimmer of hope for the industry. Residents of Zhuhai have been able to apply for tourist visas to Macau since Wednesday, and this will be expanded to cover all residents of China’s southern Guangdong province starting August 26.
All Macau casino operators are expected to benefit from this, according to analysts from US brokerage Jefferies, especially with the October Golden Week not far away. “We expect the VIP segment is likely to rebound most quickly, given expected social distancing measures at the Macau casinos on mass tables. While the development should be positive for the entire group [of casino operators], we prefer Las Vegas Sands and [subsidiary] Sands China, as Las Vegas Sands remains one of the best capitalised companies under coverage, while Sands China will have the most recently renovated product,” the analysts said.
Casino stocks surged on Tuesday on news of the tourist visas. Sands China led the gains, rising by about 10 per cent, followed by Galaxy Entertainment, which rose 5.5 per cent. On Thursday, however, they declined, with SJM Holdings faring the worst and retreating by 2.6 per cent to HK$9.64 each. Sands China also declined 2.1 per cent to HK$32.65.
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