S Source: the Company,the Source: International.Guotai Junan e 52 Weeks high/low 52 Weeks vol. average 3 month m) Market (HK$ cap. (m) issue in Shares 201 201 201 20 20 12/31 年结 Year End e 公司报告： Company Report:
th 13 12 预期 Tab Gaming 27.3% Expect 6 5 4 e F F F A A las
EV/ 同行 公司目前的后 我们定首次投资评级为“收集”，目标价为 率 间 以及澳门百老汇将在 台量将提升 元，相当于 我 预期 门总博彩收入增长在 澳门政府拟通 反腐工作、 is price 我们认为澳门总博彩收入有可能 target Our peers. U.S. to discount EBITDA EV/adjusted 2016 10.8x / 2015 11.3x / 2014 12.6x to equivalent 8.8% an and peers Macau w EV/EBITDA, forward 9.7x at trading currently HK$39.00, at price with target “Accumulate” at rating investment initial GEG’s set We gro 1, are Broadway capacity. table gaming hotel increase in room GEG’s and 11.7% 4.8%, of respectively. growth 4.1%, representing billion, HK$15.3 and billion We added is capacity table gaming mom flat expect we 2015, In visitors. mainland of number the cap to is planning Macau 4) and a 3) targets, growth anti ongoing already. there not if bottom the approaching Macau 57 所 酒店 们 t
调整后 wth to be partly offset by lower EBITDA margin on higher labor expense. labor higher on margin EBITDA by lower offset partly be towth 赌台量在 pag 部分抵消。 分别预期 0 hotel rooms rooms hotel 0 2015 oeat 2014 forecast 8.8% 银河娱乐 客 e
房。不过，由于较高的劳动 GGR could decline further sequentially, but we think we are are we think we but sequentially, further decline could GGR fo ( Turnover 。我们的目标价相当于 HKD 年澳门总博彩收入下降 EBITDA 2 r
27.3% 4.8% 72,418 66,033 56,746 ）北京制定较 97,018 87,631 52 (HK$) disclaimer 总股数 过法案在赌场完全禁止吸烟以及
- 4 2014 3 市值 收入 corruption campaign, 2) Beijing has set low 2015 GDP and M2 M2 and GDP 2015 low set has Beijing 2) campaign, corruption
个季度预测 个月平均成交股数 m) expected to add 500 gaming tables, 1,000 slot machines and machines slot 1,000 tables, gaming 500 add to expected 、 hc i euvln t 1.x 05 EV/EBITDA. 2015 11.3x to equivalent is which (
，从而 2015 。 HK 00027
11.7% 年至 sector (HK$ m) (HK$ 2015 2015 (
周高 m) - hn they when 2016 adjusted EBITDA of HK$13.2 billion, HK$14.7 HK$14.7 billion, HK$13.2 of EBITDA adjusted 2016 2015 2015 full smoking ban in casinos is likely to be implemented implemented be to likely is casinos in ban smoking full
2016 ( 将拉
和 低的
年 年除了有新增赌台或者酒店客房的那些月份之外，月环比持平， / HKD Net Profit 低 年提升
Galaxy Entertainment 股东净利
EV/EBITDA growth except for when new casino hotel room or or room hotel casino new when for except growth GEG 4.1% 5
10,899 10,052 11,674 11,940 升 Company 年调整后 ) 7,378 2015 月
进一步 公司的收入。预期公司投资
m)
1 27.2% 27 的
capacity and 27.3% increase in GEG’s effective effective in andGEG’s increase 27.3% capacity
’
2.6 s , forecast 27.2% decli 27.2% , forecast ( pn n a 2, 2015. 27, May on open 力
增长。 ‘
年国内生产总值增长和 000) 日开幕 27.3% 费用，我 环比下降 倍 II Phase Macau Galaxy bn US$2.5 39.00 。 EBITDA 估值为
2014 revenue growth growth revenue
每股净利 在 ，
新增 ( HKD 2.726 2.726 2.805 2.575 2.38 1.762 港元，相当于 2015 4 EPS 们 ）澳门正在计划限制内地旅客量。预期澳 ，但是应该快要见底。 年、 9.7 ， 为 预期收入增长将被较低的 5 7 ) 00
年公司的酒店房量将提升 倍，低于澳门同行 132 1 “ 1.3 每股净利变动 收集 台赌台、 74 hich is an 11.6% discount to to discount 11.6% an is hich 亿港元、 . 倍 039 Challenges include 1) the the 1) include Challenges 11.3
M2
25 GGR 2015 Macau in ne 1 ( 141.9 141.9 2015 △ will be will ”
16 48 EPS ( / 35.5 1,000
2.8
4 33 8.9 7.9 亿美元的澳门银河第二期 货币供应量增长目标、 %) 倍
, , , 459 817 2 les Increase Increase les We We 147 ) . 51
15 2015 年和
( . . .3 台
0 9 8 00027 HK 00027 driven by 34.8% 34.8% by driven 亿港元和 xet revenue expect 挑战 11.6% 角子机以及
1 年 0.8
EV/ 市盈率 包括 EBITDA PER 15.9 15.4 16.8 18.1 24.6 倍 FY15 FY1 (%) float Free shareholder Major ，低于美国
34.8%
(x) EBITDA
GEG is is GEG 15 2016 1
5 ）持续 3
1,570 . Est. NAV (HK$) Net gearing ，赌 亿港 利润 and and
每股净 3 年
) 。 . ）
10.247 10.247 ( HKD 9.785 9.785 9.188 7.688 5.204 自由流通比率
B 资产 PS
(%) )
Source: Bloomberg, Guotai Junan International. Junan Guotai Bloomberg, Source: 大股东
(60.0) (50.0) (40.0) (30.0) (20.0) (10.0) 股价表现 Stockperformance 10.0 20.0 平均股价（港元） Avg 相对恒指变动 index% HS to Rel. 绝对变动 % Abs. 股价变动 Share in Price Change Share price price Share 6 评级： Rating: in 2015, 2015, in
0.0
- FY1 FY1 18m TP Mar .
share price(HK$) share -
14 5
5 市 每股估值（港元）
净负债 % return % Apr P (%) 净
BR 4.2 4.4 4.7 5.6 8.3
(x) - 率
14
%
目标价
股价： /
Jun 股东资金
- 14
每股股息
( Jul HSI HKD : 2.228 2.228 2.292 2.104 0.000 0.000
“
DPS - 14
Accumulate
( 1
% (15.9) (19.4) ) 39.3 Sep 个月
iy in rft Ltd. Profits Lion City M 1 )
-
14
Oct Galaxy Ent. Galaxy
- 股息率 14 +86 755 23976684 +86 755
Yield 3 Accumulate (29.5) (
(%) 40.8 27.2 2015 March 13 个月 Dec 5.1 5.3 4.9 0.0 0.0 Noah Hudson Noah 3 M 3 收集 -
14 )
HK
HK Jan 净资产收益率
Page Page ( - $ 首次研究 15 $ N
39.00 35.000 (60.3) ( 54.2 50.9
et cash Initial Mar 1 1 Y 1 30.9 1 年 ROE
51 69 - 27.2 29.6 30.5 37.0 25.6 of of ) ” 15
(%)
% . .
2 1 29 )
Company Report Galaxy Entertainment 银河娱乐 (00027 HK) GTJA Research 国泰君安研究
Se APPENDIX FINANCIALSTATEMENTS ANDRATIOS VALUATION RISKS FINANCIALANALYSIS COMPANY INDUSTRYUPDATE e Macau Gaming’s Historical Development Dividends EBITDA and Net Income Expenses Revenue GEG andCasinos Development The Concession Gaming History and Background th e las
...... t pag
......
...... e
...... fo
...... r disclaimer
......
......
......
......
......
......
......
Page Page .... 2 ..... of of
26 26 24 22 21 20 20 18 13 13 . 29
9 8 7 7 3
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se year last than lower is which China BeijingexpectWe couldbe new limitations on visa seasonstravel peak locals about the number of visitors, many from mainland China, causing congestion in some parts of the city with mainland’s c overcrowdingand traffic congestioncaused by mainland visitors,and overcrowding. T Year. ChinesetheNew Year. February when GGR crashed 17.7% Macau’s Source: ( Figure masssegment when its GGRplunged by 18.2% qoq, the steepest drop on recordgoing backto1Q05. praddition,theIn2014. capacityin China were segment mass the affecting M junkets GGR, VIP anti acceleratedits suffer segment VIP The 3.1%. just by declined GGR negativewasthewithsincesecondgrowththeyear GGRVIP sector VIPGG With the central government quarterand the last three quarters. 2002. in up Macau UPDATE INDUSTRY - - Annual 10% 20% 30% 40% 50% 60% 70% 80% 20% 10% he Macau government Macau he ass market e 0% th e February GGRwas thelowest it’sbeen since January 2011, when GGRwasMOP18,571 million. ’ s 2015 GDP growt2015GDP s Gaming Inspection and Coordination Bureau of Macao SAR. Macao Bureau of Coordination Inspection and Gaming - ’ las stotal 1 fell from 217inJanuary 2014 tojust 183 57.8% Rshowed declinesqoq inthe quarters twofirst followed positiveby growthqoq 3Q14 in 4Q14.and ) :
69.9% t GGR 2010
33.3%
Macau pag t he number of lice ofnumber he However, there was a huge difference between the VIP and Mass Market segments, and also between the firstMarketHowever,betweenhugedifferenceMassalsosegments, theaandVIPandbetween there thewas e GGR increased by 13.7% for full year 2014, grossgaming revenue fo VIP Revenue Market Gaming Growth Mass Market Gaming Revenue Growth Gross Total Gaming Revenue Growth a u 2.0% up was A r entral government. It has been reported in the
ccording to Macau’sSecretaryfo ccordingto Total, disclaimer - ’ corruption campaign, which we expect to continue indefinitely with no let up in sight. in up let nowithcontinue indefinitely to expect wecorruptioncampaign, which s low GDP and M2 growth targets for 2015 will have a negative effect on Macau GGR.oneffectMacaunegativegrowthhave will a targetsand lowGDP M2 2015 fors . 2011
36.1% 44.6% No cap has yet been decided and limits could v couldlimits andbeendecided yet has cap No 42.2% From 2008 to 2014,From2008averagetoon has increasedGGR 6.4% by VIP h target at 7.0%, lowest7.0%,target at h is making plans making is
and nsed ’ s target of 13% and 13% of target s ’ s ongoing anti 2012 mom 7.5% s for mainlanders toMacau. 13.5% 30.0%
Mass
junkets ( junkets emium mass segment suffered along with the VIP segment. 4Q14 was a disaster for thedisasterforasegment. VIPemiumsegmentwas the sufferedmass4Q14with along
n aur 21, u hps ht h sco hd b had sector the that hopes but 2015, January in
mom
GGR ( “ 13.1% 18.6% GGR ’ 2013 s 31.0% gaming promotersgaming . slowing
to to February Growth - ” corruption )
cap
byyear end declinedby 2.6% in 2014, target r Social Affairs andAffairs Social r -
ugss hr’ no there’ssuggests
10.9% 2014 - D got aog ih ital n nw aig r aio oe room hotel casino or gaming new no virtually with along growth GDP 13.7% the number of mainland touristsmainland of number the 2.6%
’ s ed
in over 15 year.over15 in mom
campaign hog 21 a te hns governmen Chinese the as 2014 through
but declined qoq from 2Q14 through 4Q14 , accordingpublic to broadcaster Rádio Macau.
plunge was especially bad, considering that it was the month of )
local media that there has been discontent among some of the Figure Macau in Source: Source: ( - - - - Quarterly 10% 15% 25% 20% 15% 10% - 0% 5% 5% ’ , M t s ary for different seasons of the year.thedifferentof forseasonsary Gaming Inspection and Coordination Bureau of Macao SAR. Macao Bureau of Coordination Inspection and Gaming heMacau governmentplans to discusssoon the issue - 2 1Q13 opening Culture 0.3% 5.7% 5.5%
acau : plan for plan M2 growthM2
decreasedby Macau )
- Total Gross Total Gaming Revenue Growth (qoq) VIP Revenue Market Gaming Growth (qoq) Mass Market Gaming Revenue Growth (qoq) the first 16.0% ’ s 2Q13 , 1.0% 2.4%
VIP some up in 2 in up i stimulus big Tot - GGR 11.6% for 2015 has beenhas2015 for 14.4% 3Q13 al, 3.5% dec mom Maca 002, the first being in 2005whenbeingVIPin002,first the
VIP
1 to control traffic congestionand traffic control to
5. linesince the industry fell by 10.9 12.2%
12.3% 4Q13 6 - in the month of the Chineseofinthethe month New u residents are not happy abouthappy not areresidents u 1.5% and % toe ot ee ahd in dashed were out ottomed
hs year this
in 2014. in
Mass - 2.1% 19.6% 1Q14 5.4% % in 2014.
cniud n even and continued t GGRqoq .
targeted
2Q14 - The totalThe uig the During . - 11.1%
2.4% With the plunge inplunge the With Factors negatively
, , especially during
- As a result, thereresult,a As The2014drop in 7.2%
- 3Q14 2.0% -
0.4%
8.8%
Sequentially, at just 12%just at Beijing setsBeijing ’ Page Page Growth s number ofnumber opening - National
18.2% - 4Q14 4.1% 8.8% 3 of of 29
,
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se massgamblers. to needthe avoiding therebymainland, from Macau in MOP borrow to is way convenient more and cheaper fee creditandgamblersmass cancontinue usetheto China ofcrackdown useonillegalthe With paymentsbe to recordedas domestic transactionswithin the PRC, thereforebeing chargedlower fees. registere the if illegal is it However, Macau. in registered goods the cash. Gamblersroutinely terminals.UnionPay just0.2% of Macau useofillegal2014, of useillegal continuedcrackdown on the think We airport 2016bylikely is directorof theTobacco Prevention Controland floors. casino mass on lounges smoking end and rooms VIP from smoking Macau’slargest labourgroup call, earnings 4Q14 allowed be longer tot noon effect detrimental a would have smokingwould and casinos that the meanin anywhere would ban new proposed The MOP600). to MOP400 from ranges fine passed until after Aug. 15, if passed at all, and w governmentproposewouldbillthatwouldsmokingbana fully inside casinos, including VIPnotrooms.likely toThe billis b existingairport of Fullsmoking ban likely be to passed by 2016would directnegative impact on smokinggamblingasmoke,stopgoloungewantspenttime to havelessand everytheytimegamblingto theyand to a has earningsca rooms that do not contain any gaming tables or slot machines Oc 2014 6, October that dare or want to engage in corruption. During the NPC / CPPCC joint session in Be againstcorruption comprehensively andleavingnothingoff limits order toanfosterin anti the plenary session firms C report membera 7 ofthe China'sCentral Commis China to sight in end No yearthis than in2014. People's Congress ombat e tober 6, 2014, smoking is allowed only in private VIP gaming rooms and on the main gaming floor in enclosed smokingenclosed in floorgaming main the on and roomsgaming VIP private in only allowed smokingis 2014, 6, tober
f th “ or
our toughstance corruptionon ishere to stay e and - " las styleenclosed smoking lounges. using R - orpin apin ae osdrbe rges n 04 the 2014, in progress considerable made campaign corruption C i miln China). mainland in d ule of of ule t
orruption fugitives pag for MOP cash which they can whichtheycash MOP for ll, Melcoll,Crown (MPEL US)indicated thatsmokingthe ban isreducing average the timethatsmokers play, since e UnionPay fo
. emphasiz L r
The ban is expected to include an end to smoking in Macau casino VIP rooms and the removal of existingofremovalMacauVIPandthecasinosmokingrooms in to end expectedincludean to Theisban aw in in aw s disclaimer -
man Politburoman Standing - " moking in early March, bod s h 2015 the as abroad styleenclosedsmoking . The work report was passed by the CCDI the bypassed was reportwork The . ’ s total2014 GGR. passed. be eventually will bill the believes he that indicatedStephen Wynn chairman ChinaUnionPayamountedMacau in MOP784 to million (US$98.2 million) Mainland
sion fo in Macau in A
circumventthis by buying gaming ing ing the need to crac w ccordance
’
s intensifyinganti s
ban is negatively impactingGGR.negatively is ban
, , theMacau Federation ofTrade Unions ers rDiscipline Inspection (CCDI) These
, revenue. in Chinamainland of out RMB20,000(US$3,188)of limit daily a take to allowedonly are Premier Li Keqiang said that China making it making ith ith eitrd in registered
TheMacau government continues to crack down on illegaluse of unre transfer
actively exp anti use R We Committee egulations
- an expensivean
rf priorities graft for lounges.
think th - OfficeofMacau’s Health Bureau UnionPay, ould include stiffer fines for individuals smoking in banned areas (currently the corruption campaign.corruption
cash gambling … noPy terminal UnionPay jewellery watchesand
and anad China mainland ourtolerance forcorruption zero. is
is into Macau into legally as wellassecretaryas the oft
G includeendan to smoking Macau’sSecretarySocial Affairsfor Culture andannounced thatthe appliesall to Macau casinosand not justto Melco Crown. China UnionPay in Maca inUnionPay China and deepen overning ; this ; VIP and premiumgamblerscanandVIPmass . option for option
concludedon January14 n aur 13, January On (electronic cigarettes, however, are not restricted) registeredUnionPay terminals.
transaction is not illegalnottransaction is ’ s 125 members and sets as targeting s targetingas sets and members125 s Under the current smoking ban, which went into effect on effect into went which ban,smoking current the Under . P Of course, this method only method thiscourse, Of arty revenue.gaming al ’
announcedthat the fight against corruption s economy would face even mo terminals trans is
junkets The fifth The “ o U to
unregistered inMacau with oenet ut ute ps frad t battle its forward push further must government fer
r nswervingly codn o www.ggrasia.com,to According Premier ing and then settle up in RMB in up settle then and
r ilgly mgld no aa, allowing Macau, into smuggled illegally are saidthata ijing in early March, Premier Li Keqiang said plenary session of the Communist Party ofParty Communist the of sessionplenary
he a large amount of money out of China. of out money of amount large a u in
CCDI, it w it will have limited impact on GGR; in GGR;on impactlimited have will . environment ”
i Jinping Xi At the
casinoVIP roomsand the removal
” urgsee i Mcu u instead but Macau in (unregistered UnionPay as long as theas long as
ouldpetition thegovernment to ban During Wynn Macau (01128 HK)(01128Macau Wynn During P
fullban smokon made a presentationamade romote plenary session
. . Xi pointed out that although applies to VIP and premiumand VIP appliesto Thereisusually
eiee a delivered
and immediately whereofficialsdon , which is equivalentwhich is ,to continue to C re formidable difficulties lean
UnionPayterminal
enior officials, stateofficials, enior
G after returning to returning after
inginall casinos On January 27 January On vrmn and overnment ,
gisteredChina Wang Qishan speech . ag h Ho, Tang Chi
In their 4Q14
a use junketuse Page Page of the workofthe
3 return % ’
4 t even t t the at to5 of of ing 29
% is ’ A e s , ,
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Inspection Source: Gaming yoy CasinoHotel Rooms yoy SlotMachines yoy GamingTables Table estimates. International Junan Guotai are rooms and hotel machines slot tables, & 4 gaming 3 Macau Phases Note*:Galaxy E Source: Additions: Total Not Additions: 2017 Total Additions: 2016 Total Fall 2016 Mid 2016 2016 1H 2016 Additions: 2015 Total 3Q Mid 2015 27 Opening Expected Table willalsodrive GGR sequential growth. gamingre Macau Historically, rooms. 1,600 and tables gaming 500 around with City Studio its open will US) (MPEL Crown Melco 2 MayMacau GalaxyexpectedBroadwayopen onare at to numberof gaming tables by 17.5% and the number of casino hotel rooms by 18.9% approximately2015, In ntertainment (00027 HK) (00027 ntertainment e 15 May
Set th Growth Growth Growth
e - - Guotai Junan International, the companies: companies: the International, Junan Guotai 2 1 las 20
: Macau : Macau
15 t
venueincreasedhas newgamingas hoteland capacity wasadded,weandexpect new thatthecapacity yearthis pag
e fo r G PlannedDevelopment disclaimer amingTables HK) (00027 Galaxy Ent. HK) (00880 SJM Hds. HK) (02282 Mgm China HK) (00577 XIII Hds. Louis HK) (1928 San HK) (01128 Macau Wynn (MPEL US) Melco Crown HK) (00027 Galaxy Ent. HK) (00027 Galaxy Ent. Developer ,
Louis XIII Hds. (00577 HK) XIII (00577 Hds. Louis and ds China ds China
Coordi US$
13,859 16,585 2012A 35.2%
5,485
3.3% 3.5% 7.3 nation Bureau Macao SAR, Macao SAR, Bureau nation
, b Slots Machin
illion in new casinonewin illion Phase Macau Galaxy (SJM) Palace Lisboa Cotai MGM XIII Louis Macao (Sands) The Parisian Palace Wynn (Melco Crown) City Studio IIPhase Macau Galaxy Macau Galaxy at Broadway Name Project
- 16,690 13,106 2013A 20.4% 21.0% 5,750 Wynn Macau (01128 HK), MGM China (02282.HK), S (02282.HK), China MGM HK), Macau (01128 Wynn
s 4.8% Timeline
3 & 4 3 &
and
Melco Crown Entertainment (06883 HK (06883 Entertainment Crown Melco
es
16,790 13 2014
- - 5,711 andHotel Rooms, 2012 0.6% 0.7% 0.7% Government of Macao Special Administrative Region Statistics Statistics Region Administrative Special of Macao Government ,018 investigation Site construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Renovation Under Status Current A development is planned to come into operation,intocome increasingdevelopmentplanned theto is
7 with 500 gaming5001,2tables with7and 19,960 15,518 18.9% 19.2% 17.5% 2015F 6,711
US$6.4 26,660 20,593 33.6% 32.7% 22.6% 2016F 8,227 Investm (US$ bn) (US$ US$29.0 US$10.7 - - ). 2017F US$2.7 US$4.1 US$7.3 US$3.2 US$3.0 US$1.1 US$7.7 US$3.9 U US$1.0
S$2.9 ent ent and 28,660 21,593 2017F
8,927
7.5% 4.9% 8.5% s China (01928 HK), SJM (00880 HK), Galaxy HK), Galaxy SJM (00880 HK), (01928 China s 350 .
Casino Tables GalaxyMacau Phase 1,000 3,306 1,516 oa Growth Total - 450 550 500 500 700 500 2014 to 2017 50 hotel rooms. Then in 3Q15,hotelrooms. Thenin 50 90 66 0
19.5% 18.4% 56.3% and
Census Service. Census 2,500 1,000 2,500 1,500 1,000 8,845 1,000 5,075 1,500 Slots
270 75 0
14 II alongII with Page Page - 17CAGR
Rooms 19. 18.4 16.1% 5 15,370
3,500 2,000 6,700 1,500 3,300 1,700 3,170 1,600 1,250 Hotel of of 200 320 5 29 % % ’ s
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se International. Junan Source: Figure capacityon topof thealready higher capacity from GalaxyMacau Phase II. Macau in increase 8.7% an to translates some 4QOur MacauPhase II 3Q Our newcapacity will only be open for portiona of 2Q15. Macau in hotelroomsMayon 27, 2015 2Q14. 2Q Our Feb.GGR declined 35.1% yoy and we are forecasting flatqoq growth for March. 1Q14. 1Q Our sequentialgrowth except for when new casino hotel room or gamingtable capacity is added. mainland of numbervisitors, the on cap likely and ban smoking the of expansion likely Beijing, from targets growth M2 and GDP to We - - - 10% 20% 15% 10% - 0% 5% 5% e a
forecast th 2015 yearfull decline of time e
aig npcin n Codnto Bra o Mac of Bureau Coordination and Inspection Gaming M - US$2.5b las 1Q14 3 15 2.1% 15 15 15 a : we ’ t s total gamingtable capacity, which we expect to attract moregambler
cau GGR hit its all time high in 1Q14 of HK$99.2 billion, making for a tough comp in 1Q15.
Macau in 3Q15 with around 500 gaming tables and 1,600 rooms (I assume it does not open until the end of 3Q15).of enduntil theopen not doesassume it rooms1,600(I gamingtables and 500around with3Q15 in pag qoq qoq qoq qoq
except - MacauGGR e Total Gross GamingTotal Revenue Growth (qoq) 11.1% 2Q14 fo
GGRgrowth forecast of8.1%equivalent is to GGR growth forecast ofgrowthforecast GGR GGR growth forecast offorecast growth GGR GGR growth GGR illio willbe open for the full3Q as r
Total disclaimer
n Galaxy Macau Phase II is expectedgaming500tables,nPhaseis1,000addMacau Galaxy 1,250slot II five machines andto - 3Q14 aa GR rwh o contin to growth GGR Macau 8.8% GGR Growth
- 4Q14 qoq growthqoqfor
8.8%
. Thistranslates. 9.4%ato increase in
forecast of 5.7% is equivalent to equivalentis 5.7% of forecast 27.2 1Q15F - 16.9% %. ( With theChinese government qoq 2Q15F - 4.0% ’ s casino hotel room supply and an 8.1% increase 8.1% an and supply room hotel casino s - ) - 1
4.0 1Q 6 .9 3Q15F opposed 5.7% % 15 to 4Q15 to 15 % is equivalenta isto % ao SAR, Guotai Guotai SAR, ao
is equivalent to a equivalent to is
4Q15F ue to be under pressure sequentially throughout 2015, showing flat flat showing 2015, throughout sequentially pressure under be to ue 8.1%
tobeing open for of
- 16.9 Junan International. Junan Source: Figure - - - - 10% 15% 25% 20% 15% 10% an 8.8 an - 0% 5% 5% a 23.0 a %,
Macau ’ songoing and intensifying anti 33.6 38.5 - Gaming Inspection and Coordination Bureau of Macao SAR, Guotai Guotai SAR, Macao of Bureau Coordination and Inspection Gaming - 4.0%, 5.7%4.0%,and8.1%,respectively; 1Q14 % 4 0.3% 5.4% : just % % MacauVIP and Mass y % ’ s casinos hotelroomsupply 8.8%anandincrease oy yoy - yoy VIP Revenue Market GrowthGaming (qoq) Mass Market Gaming Revenue Growth (qoq) yoy rcino Q afraction of2Q. 16.0%
2Q14 decline -
sto Macau, driving GGRgains. However, the 2.4%
decline decline due to high comp high to due decline decline due to high comphigh to duedecline - - 14.4% 3Q14 0.4% .
MelcoCrownwillopen its Studio City . G 4Q14 - - 18.2% 1.5% rowth will benefit will rowth
n Macau in
- 1Q15F GGR 19.6% - 12.6% - Combined 2015 Jan. and corruptioncampaign,
Growth ( 2Q15F ’ 0.7% oa gmn table gaming total s - 7.2%
arison basearison worksoutthis a 3Q15F qoq 10.6% rison baserison
qoq 2.0% Page Page as ) 4Q15F 12.8%
4.1% Galaxy 6
of of - This star low
29 in in
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Club Macau government Macau acquisition,the of time the At votingshares carrying 97.9% of the ConstructionMaterials L associatesrespectivetheir ownedby government company liability acquiring predecessorCompany,Thethe of products suchas asphalt. It Kong Hong Pipe Ltd. as Exchange materials Before 2005 the Company was called Source: (GEGCasinos Highlighte Figure althoughthis only accounted di open) owns EntertainmentG Galaxy History C stributesconstruction materials throughConstruction its Materials Division e OMPANY th ” e Te opn as operates also Company The . at thetime) and www.macautripping.com , Ga , - las 5
: was restructured t
MacauPeninsula Casino Map GEG pag i operatestwo Galaxy Casino, S.A Casino,Galaxy business and laxy
and for a for e “ International Pipe Ltd PipeInternational fo ’ s currentchairman, Macau (calledMacau
r Mainl Background
and disclaimer incorporated casino . .
Rio S.A. Casino, Galaxy The predecessor of of predecessor The and t d ntegrated casino resorts in Macau, inresorts ntegratedcasino / gaming concessiongaming roup ( roup macau .,
Casino and din Red) hn. n a 1997, May In China. and
later whosechairman atthe time was also
for
renamed as “ / macau . Galaxy companiescontrolledthemby n aa o 3 Nvme 2001 November 30 on Macau in
, which is is which , 3.7%of total operating revenue2013 in HK, 00027 exp Galaxy Casino, S.A.Casino,Galaxy .
Dr.Lui economic interestin Ga . and . ” K. WahK.Construction Materials L
, which manufactured,whichsold , three Cotai Mega ResortMegaCotai “K. Wah Construction edtheinto slagbusiness
Che Woo,
K. Wah currently the Companythecurrently was . Wah K. “ “GEG” or “the or “GEG” iy Club City , which it received on receivedit which , also t bsns included business its
Construction Materials
osrcin aeil L Materials Construction
and already operating the Waldo the operating already ”
held c
sns n Macau. in asinos theLuiFamily ( ” laxyCasino, S.A.
at the time the at Company one of the only three gaming concessions awarded by the concessionsbyawardedgaming three only the of one StarWorld ).
(GEGCasinos Highlighted in Red) Figure Source: Materials L On Dr.Lui and and
July 26 Ju 26 the for ’ s main subsidiary.main s
www.macautripping.com the manufactureof PHC pipes. distributed concrete pipes.distributedconcrete - ”) 6 ) Macau quarrying . t
,
: Che Woo 2005,22, d
all thesons currently Gr MacauTaipa ne 2002. ne ., Ltd., which was a construction materials supplier to
t
enteredthegamingMacau market n addition, In and d ups o sbitn a edr o h Macau the to tender a submitting of purpose acrossMainl atpurchasea price of . ”
t d and
and . Waldo (calledWaldo
raymxd ocee cement concrete, mixed ready , a frt itd n h Hn Kn Stock Kong Hong the on listed first was , the pr the
complet Galaxy Macau Galaxy Galaxy Casino
operates was involved only in the construction and and GEG edecessor of the Company,edecessortheof
and /
macau daughtersof Galaxy
ed Casino, S.A. Casino, while also developing also while
CotaiCasino Map
China,Hong Kong
five theacquisition of 88.1% of the also /cotai “ Galaxy Casino at Cotai City Cotai at CasinoGalaxy Casino, S.A.Casino, In May 1 May In
c . (currently only Phase I is I Phaseonly (currently
HK$18.4billion. manufactures
asinos in Macau. in asinos
Dr.Lui
was 997, International997,
Che Woo originally
was
and Page Page in 2005in ,
StarWorld and sells a limited a
Macau K.Wah 7
oth GEG , of of 90% and and 29 by er ,
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se occurrenceof right the has also government con into rescissionwould confer on public the in time any at Concession the rescindunilaterally also may Government Macau The Concession. depreciation interest, of deduction of undertaking such from income the to correspond ceasedobtaintoconsequence in such of redemption atits resort Casino, S.A. givingby operations permitted to compensation Macau (but not its hotel, retail or other nongaming dat that on extended, is Concession the Unless 2022. June 26 casinogames of chance was granted to concessionsto operate GEG GamingThe Concession International. Junan Guotai Source: the Company, DeterminedNot 2015 2015 Planned 2013 2013 2011 2006 2006 2006 2006 2006 2005 2005 2005 2004 2002 Casino Table gaming Limit T he e th ’ – – from name its changed Company ed" gmn cneso eprs n ue 2022. June in expires concession gaming s e – – – – – – – – – – – – – -
3 July July las Oct. Oct. May27 M May Sept. May April Feb. Nov. July July June : and
GEGCasinos ieain h rmiig eid ni epr o te concession the of expiry until period remaining the sideration ay27 GalaxyCasino, S.A. t on 26 October26 on pag
hospitality.
will be entitled to e specifiedevents ofdefault. fo r
aay aio S.A. Casino, Galaxy disclaimer
Openingof Openingof Openingof TheCompany TheCompany TheCompany opened TheCompany opened TheCompany opened TheCompany had its softopening for TheCompany opened TheCompany opened T Company name T GalaxyCasino S.A. openedits first casino, Predecessorcompany under the Concession. Beginning on 26 June 2017, the Macau government may redeem the heCompany heCompany a
The gamesof fortuneor c and 2005.
Companyalso
MajorEvents Timeline
theCompany fair at leastone year’sprior notice
non non US The name change was made to better reflect the main business of the Company,namely,the of business main the reflect better to madewas changename The o uni to and
suspendedoperations of c $ celebratedits 50 - - ompletedHK$3.25 bn acquisition of the cqui 2.50b gaming gamingUS and changed
reasonable compensation. Such compensation will correspond to the benefit that it has
and laterally GalaxyCasino, S.A.
red mriain mlile b te ubr f years of number the by multiplied amortization,
celebrated its50 K Wh osrcin aeil Lmtd t "aay netimn Group Entertainment "Galaxy to Limited” Materials Construction Wah “K.
n itssecond flagshipproperty, its Gr Pres Rio GalaxyCasino, S.A. Galaxy Casino, S.A. Casino, Galaxy
theright tocompensation, the amountof which han GalaxyCasino, S.A. Galaxy Macau Galaxy Macau
and from first Casino $ emnt, ihu cmesto, h Cneso a ay ie pn the upon time any at Concession the compensation, without terminate, ceor other games incasinos ident
1.1bn facilities) will automatically be transferred to the Macau government without
f Waldo
lagship “K. “K. Wah Construction th
aay aio S.A. Casino, Galaxy Anniversary
Casino
, , a
pbi tne ws odce i Dcme 20 t gat three grant to 2001 December in conducted was tender public A Broadwayat Galaxy Macau ,
“ a Gr property, CityClub th
. I ,the Company
- - “ Gr Anniversary
CityClub and f theMacau government r Phases3 Phase 2 ,a and WaldoCasino e all e
wasgranted gaming concession - “ hotel
il cea will for
CityClub Waldo
Waldo ” StarWorld HK$18.4billion
of -
” casinoundertaking. The
Galaxy Macau and GEG , a
e o e nild o prt n csn r gaming or casino any operate to entitled be to se Materials L inNovember 2005.
’ ” s principals subsidiary.
for re nte ia ya pirt h redemption, the to prior year final the in
“
Gr City Club 4,
’s casino operations casino ’s inMacau. Oneof three concessions to , a ,
and US$6.4
Macau novation and “ CityClub
Waldo
td
” ( h ivsmns made. investments the ”
formerly ,
to to “Galaxy edeemsthe Concession then bn (PhaseI) in theMacau P
to properties ”
casino US$7.7 eann utl exp until remaining
the wouldbe calculated taking amountofcompensation will
The ,Cotai in E and Gr
ntertainment Group
bn investment Concessionexpires on and
eninsula related equipment in equipment related
interest, but such but interest,
Waldo
) h Macau The Concession
Page Page r o the of iry
operate
Galaxy before 8
of of Ltd. 29 ”
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se banqueti includ Suite. Presidential Airport 10 Casino Rio fitnesscenter. Bar restaurantsoffer boutique Terminal. Ferry Maritime Macau the from distance short CasinoWaldo evenfurther of gamingtables reported GEG time last the interim report 1H2006 in 63 gaming tables GEGopened StarWorldits Macau in October2006. tables f The purchased Gr addition, In used to be casinos Club City three operatescurrently GEG administrativeexpenses. S expensesas the of p a as P 2022. June to up agreement hotels certain within GEG GEG ervice roviders areresponsible e - gamingtables
iue akn dsac t te og Kong Hong the to distance walking minute . th However, other than that, the only otheronly the However,that, thanother e casinos Club City our develop e ercentageof . las and
Casinos Furnished aio sauna casino, P - ng facilities. stylehotel. Offeringguests four roomstyles to choose from t
roviders. pag
andre nrae te Company the increased 128 slot machines each, as at year end 2007. a City Club cas
decreased City Club City , e
ed capacity Thegaming area and and fo City ClubCity ing r
allowed - and certain “ certain disclaimer renovatedit
asa
510 slot machines.As theMacau government determines each Waldo wa Waldo
T the
Company h Srie rvdr as agree also Providers Service The and Chinese,Western,
hree f hree .
75 slot machines, T
CityClub casino at “ thegaming capacity at itsCity Clubs when opened in late February late in opened he royalItalian palace and ,
the
forthe provision of a steady flow of customers Development we
ood o C
Company ino.
pened in July inpened
ity
these numbers, its four City Clubs gaming operations had fallen had operations gaming Clubs City four its numbers, these . s previously operated as one of the Company the of one as operatedpreviously s
four City Clubs dropped to 280 spa
think GEGthinkshiftedsomeofgaming tablesits City ClubsStarWorldfrom its to Macau, GEG
had a had T and and
hebalance of net gaming wins lessall operating expenses is C GEG currently operates City Club casinos ,
lub” casinos lub” extendedover the rear lobby, mezzanine,1st, 3rd
gymnasium, willre i beverage outlets offer outletsbeverage ’ s responsible for the managementthe for responsible s s total
has total casual s and ’ -
ope net gamingwins
of just 260 gaming tablesgaming 260 just of ” gemns ih hr part third with agreements
, gaming 2004 the addition of
the n option and
- it onit May 27, 2015as aa Fry Terminal Ferry Macau targeting and 24 story24
at the Waldo HotelWaldo the at
2006 at 2006 fine In 2006In its capacity
for entertainment is ga entertainmentisfor and nor etd wmig pool swimming heated indoor -
dining to
4 ,
has - the VIP gaming market.gaming VIP the Rio Casino Chinese, WesternChinese,
and urne pyet t the to payments guarantee star the Gaming capacity at G
eubse i 20, ad Htl a bcm Mcus first Macau's become has Hotel Waldo 2008, in Refurbished gaming tables o 9 gmn tables gaming 396 to
as wellastheas
interimreport also all operatingall 4 Rio - star GalaxyMacau opened in2011. hotel
bought – anew property, ,
Rio Hotel Rio in the Macau Peninsula.Macau the in y “Hip”,"Glamour", "Comfort" President Casino and and . and
“ Revenueattributable to the has evc Providers Service Waldo and
ming since there is no swimming pool, sauna or saunapool, swimming no is theresince ming
510 slot machines, or on average 65 gaming65 average on or machines,slot 510 a ’ , the Company, disclosed that WaldoCasino had VerdeCafé s and operation of the of operation and
449rooms, including64 and 15 City Club casino Club City
500
-
administrativeexpenses EG Casino minute in the Macau the in
is now renovating now is Japanese gaming
slot machines and ’ and s , City Broadwayat GalaxyMacau
City Club ofrne room conference ,
, Company and 559 slot machines slot 559 5th floorsof thehotel complex. Perl drive Rio Casino C and operator lub ”
Gr e Bare cuisine City Club casino Club City o te ie f h co the of life the for
from
GEG s, but in 2013, the Companythe 2013, in but s, c s progressively declined after and
further asinos are asinos Peninsula
. . I Waldo Casino is located a located is Casino Waldo
and and
n its 2007 ’ f eti operating certain of Waldo Casino s . ’s the Company
and maximum E
s Gr incomebelongs to the
n "Pure". o oa f ut 260 just of total a to uites KuroWine tertainmentfacilities International Macau
and Presidente Casino. arerecogni not and . .
leased premisesleased
Rio Casino is Casino Rio and
n GEG In Annual R
Waldo, whichWaldo,
s Thehotel is multi
total and
. determined onesuperb Page Page
City Clubs
and and ncession -
function number ’ S 2007 s 9
ervice eport,
Cigar likely of of
and z has 29 ed
a
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se complementary renovation of price purchase a for Waldo “ After Source: Figure recreationfacilities such as karaoke, mini ft.,sq. high c extensive an hotel, star 5 suites) presidential CityClub” Gr Terminal or spacenter, Macau President Source: Figure Broadway at Galaxy Macau Galaxy at Broadway e and th - securityair e
purchasing www.tripadvisor
www.agoda.com las - wa - . Waldo 9 7 The 21 storyThe21 : : and t s theslargestMacauclubspain
, PresidentCasino Waldo pag wih s still is which , Gr Casino e a20 and fo City ClubCity swimming
to GEG’sCotai development with a focuson fam - r conditionedfootbridges
disclaimer Casino
Waldo minutetaxi rideto get to theMacau International Airport.
.com Gr City Club City / waldo 4 star hotelstar4 and .
- hadits soft
hotel was the first h first thewas currently pool.
Waldo
/ hotel , also in the Macau Peninsula,Macau the in also , ”
I
HK tks ny 5 a only takes t o / GG upne its suspended GEG , has macau n $3.25 underway May 27, May ope
212 rooms212 - mo , ning
- o and bil cine cater .
tel lion.
. inlate May
2015. ma, ma, mi includedniner c h complex The ing asino - ,
asino, Subsequently, minute taxi ride to travel from the President to the to President the from travel to ride taxi minute
t to families. It providefamilies.toIt worestaurants
On 17 July 2013, GEG purchased 100% of the propertiesthe of 100%purchased GEG2013, July 17 On ni
to open on the Cotai strip.Cotaithe on open to - golf,table tennis, snooker
and
2006. operatio
estaurant s taeial located strategically is an
When lastWhen inoperation in2013, hadit a
Source: Source: Figure Source: Source: “ Figure
opened in late April late in opened Gr ily Broadwayat Galaxy Macau complex entertainment and s n uy 03 o renovation for 2013 July in ns
and and http://www.riomacau.com/about.html www.panoramio.com s - - one barone
8 10 d ad oeain wr ssedd n uy 03 for 2013 July in suspended were operations Waldo middleclass and :
sauna,steambath facilities, gymcentre, wellasas : RioCasino
The Old
onebar.Its , and and O
that Gr customers. daet o aay Macau Galaxy to adjacent riginally calledriginally
children’scent / 2006 and photo Its . ’ s aboutit s Gr
and /
Waldo 15156228 a he buildings three t ”
) the 4 the Waldo SpaWaldo
. I
. (before renovation
. t does not have a fitnesshavedoesa not t
er Cotai atCasino “Galaxy - and star Macau Maritime Ferry Maritime Macau .
316 room (including2
will , Hotel PresidenteHotel sized at 200,000sizedat were re
of the Gr the of
- Page Page and
pn it open
ikd by linked
10 il be will
into of of and
as 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se suites250 Phase II will add Macau Galaxy operating currently the of size the doubling almost rooms US$2.5bn Source: Figure and including Macau; suites250 including 2011. Companyas tables US$1.9 bn Source: Figure 16/F Level1 The and tablesgamingVIPadditionalmachines, slot market mass 240 tables,overgaming market mass 250with currently b HK$3.0 e
th
theworld’s largestSky WavePool covering 4,000 square meters complex includes a
507 each e This www.tripadvisor.com.my www.galaxymacau.com/en/ las - - and 13 11 on May 27, 2015, 27, May on offer and t hotel roomshotel a
: n : ; pag
have
wide Galaxy Galaxy Macau Galaxy Macau meter square 550,000 and StarWorld Macau
1,500 s 1,500rooms StarW “ e
GalaxyWorldResort nearly fo
2) anaverage area of r selection of pan two more hotels: 1) disclaimer slot JW JW Marriott’ orld Macau
and 250 tables250 . machines
StarWorld 39 Macau
. villas from the award the from villas
and
(Phase I)
Phase (Phase I) targeting story .
suite (Exterior) s
- and largesthotel in Asia, the JW MarriottHotel Macau, with over 1,000 pnd n 9 coe 2005 October 19 on opened hotel Asian cuisine; distinctive retail shopping; lush oasis gardens covering 52,000 square meters, .
” II Macau Galaxy MacauGalaxy integrated
s in the five inthe s
was 556square meters
isexpected to
Ritz morethanslot240machines
opened , higher value customersvalue higher
f ive initially plannedopen to -
Carlton , Galaxy’s first flagship entertainmentcomplexflagshipGalaxy’s first ,
restaurants in in casino - - star Galaxy HotelGalaxystar winning May ’ s
, or ,
first all
add
iginally dubbediginally 2011 hotel res hotel and
with
Banyan Tree Macau; 500 rooms500 Macau;TreeBanyan 500 gamingtables, - suite hotel property in the
with
three bars restingarea, dining area
ort
. 2,200 Source: Figure Source: Figure
in 2008 in and
. Facilitie . Galaxy Macau Galaxy . has three hotels with total with hotels three has
VIP
o one to “Galaxy Cotai Mega ResortCotaiMega“Galaxy
. and
hotel a th was uk.reuters.com en.wikipedia.org The - - c 12 14 . lub
Aftera : : featuri s include more than 50 food50include thans more
140,000 square feet Galaxy Macau StarWorld Macau
million square met square million rooms room 1,000slot machine Company e
ng ang 350 Phase II Phase series s .
. on 3/F,on 5/F, 6/F, 10/F, 11/F, 12/F, 15/F and
world, The Ritz and
of delays, of it capacity for
is located on the Macau Peninsula.Macauthe on located is -
private and ton white ton s ’ will be will
s VIPRoom is 5 first suites rooms, 2,200
(Interior) suites by Japan's Hotel OkuraHotelJapan's by suites e mass mass market r ” washroom. s
s Macau and
- nticuig Broadwa including (not
rooms and Carlton, Macau - finallyopened May15on tr hotel star
and more than 600 gaming
later and
1 ’ s next major resort, major next s beach. , . 2
50 referred beverageoutlets,
gaming area
five
and Page Page - and , starhotel
with over
to by theby to casino 11
villas, of of and
y) on 29 . ,
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Figure theentire addition developments ( Macau Galaxy Gr will Broadway at Galaxy Macau ROUGE G Hotel fromGalaxy Broadwayat Galaxy Macau Source: Figure Macauwill have s riverride at 575 Gr Macau’s event meeting, br luxury international br include GalaxyMa and uestswill also beable toenjoy existing attractions of Macau’s and e and th doubl e beach, plus exhilarating waterslides, beach lagoons, white water rapids, geysers, rapids,water white lagoons,beachwaterslides, exhilarating plus beach, Alex s have will mlvonschaper.wordpress.com the Waldo las - -
17 15
t . togaming. The developmentstwo will Promenadehe
t Company. We
GalaxyMacau : : pag e cau Phase II to add new 200 outlet shopping venue as well as other nonother as well asoutletshopping venue 200 newadd to II Phasecau Galaxy Macau(Phases I Gala and
the size of sizethe and e donot expect Broadway have to any gaming capacity. Macau, cityclub will fo
and 2 ros eind for designed rooms 320 meters. Togetherwith the Resort Deck will feature the feature will DeckResort r ag Moncl Wang, er xy MacauPhase (onII Aug.30, 2014) r a “
Broadway disclaimer diverse bring
banquet space with total with spacebanquet
will add 320 hotel rooms as well as a diverse arrayentertainmentdiverse of a as hotelwellasroomsaddwill venues.320 and for ,
GalaxyMacau a more diverse more a with resort. HK Bottega s
waterpark
”
, o open to ), $3.25
(former ( . over 100,000 over
“
Broadway r Qei; flagship Qeelin; er,
billion
eea Blai Lni, oi Vuitton Louis Lanvin, Bvlgari,Veneta, ly aimedat and
Gr n t in to over 1.1 million square meters of attractions.ofmillionsquaremeters1.1 over to
array ,after family travelers. family
Phase I ” II) and
), l and square metsquare
and new Skytop Adventure RapidsAdventure Skytop new
ocated just a ninetysecond walk of - capacity family increas Waldo) alon which m ih aay Macau Galaxy with em
attractions Broadway Asian themedtropical ga
entertainment it
e
trs o Brer, H Burberry, for stores e
invested
for thetotal number of r s of retail spaceretailof s
o etranet tee il e 3 a be will there entertainment, For 3,000 guests. 3,000
g with Galaxy Macau Phase II
to attract only Phase I inBackground) Figure Source:
overHK$5 b .
10screen
visitors www.hsinchong.com - 16
hs I o My 7 2015 27, May on II Phase
: Exp f
eaturing over 200 outlets200 overeaturing rdens,world’s largestskytop wave pool Galaxy restaurants,bars illion and
– and with a with
and 3DCineplex the world’s longest skytop aquatic adventureaquatic skytop longest world’s the
ing to over 75,000 square meters, Galaxy meters, square 75,000 over to ing ay more. many viaan air transforming the complexinto Broadway at M Macau(Phase II in Foreground
wider and .
waterfalls
- gaming attractions.gaming , T range , -
both opening on May 27, 2015, - conditionedpedestrian bridge UA G In July 2013,GEGJuly In alra euy y DFS by Beauty Galleria and
hr wl as be also will There ,000
loungesto over 120 across of entertainmentinoptions of alaxyCinemas - and seat
including Together .
a kids zone, Galaxyzone, kids a
T rawy Theater.Broadway he new first
, acqui PhaseII
Page Page and hs new these - Broadway exp and to and -
red CHINA Macau 12 and
; white
of of
and will the ed 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se StudioCity, which will open sometime mid cannibalizationsomebe alsoandcompetition n thefrom revenueHowever, growth. 4Q14, year. the for 27.3% by capacitytable gaming effective days 219 last numberof gaming1,100and 27.3%increase in GEG We ANALYSIS FINANCIAL Source: Glo Figure developed tourism of Macau, significantlydifferentiate GEG invest to planscoastline. GEG front water of destination resort frameworkagreement fora Hengqin bn RMB10 an planning also is GEG and thousprovide multit a on squa hotelrooms US$7.7bn to bn US$6.4 R e Cotaito two mil evenue th forecast 2015revenueforecastgrowthGEGdriven 21.0%, of increaseGEG 34.8%byin sportingevents; re e we las - met 18 d o nw cultural new of ude be t
: : Macau pag thinkathismajoris bottle hotelroomswill 58.0%increase 4,277by toand ga into ainto major touristdestination and expected is to play a and - e trotter macao trotter r . s, withs,non e
and
HK$50billionHK$billion60towillinvested be in ( fo or 60% of the year the of 60% or leisure. r
s of additionalhotel of s disclaimer inHengqin Isl
lion square met tables. On May 27, with the opening of Galaxy Macau Phase II and Broadway at Galaxy Macau,GalaxyBroadway at and IIPhaseMacau Galaxy ofopening the with 27, May tables.On andHengqin a - nd map.svg.
Hengqin, which is three times the size of Macau of size the times three is whichHengqin, - ’
gamingamenities accounting for seffective gaming table capacity. a largeconvention centre.
G
we
2.7square kilometre l
alaxyMacau and
don and
e netimn eeet peoiaty agtn peim as guests. mass premium targeting predominantly elementsentertainment ’ ) t expect gamingt revenue intogrowthmove r , , which , part is ofZhuhai, Guangdong
s,Phases 3 - this means that in 2015, GEG 2015, in that means this neck andneckt
rooms from itscompetitors - Phases3 year. and
RMB10 billion in the propo the in billionRMB10 henewhotelroom capacity alongwith gaming table capacity willdrivecasino
and
and suites; a state of the art multi art the stateof a suites;
Isl Theexpected opening date has not yet been announced.
4will significantly
and parcelto m and
With the Company the With ewlyrenovatedVIPofMacau areaopeningFeb. 2015Wynnand in
4 95%ofthe total floor space.
and
non will be mostly non mostlybewill
We ming tablesmingwillincrease 45.5% by 1,600. to Open foronlythe
playa key role insupporting - Phases3 aig etnto resort destination gaming oveforward with the estimatethat GEGcurrently hasa totalof 2,707 hotel rooms ’ large s hotel room nights capacity will increase by 34.8% and 34.8% by increasewill capacity nights room hotel s
diversify GEG’sproduct . The . property includes approximately 2.5
roleinsupporting , complementwill thatresort sed
and has ’ s hotels running at essentially full occupancy in occupancy full essentially at running hotels s
- 4 been - stepwithexactlyofcapacity thatthere as will - purpose arena for world class entertainmentclassworld forpurpose arena gaming facilities,gamingthousincluding for
totalf
slated by slated
proposeddevelopment of worlda class Exp ’ s hotelnightssroom capacity and loor area of approximatelyarealoorof million1 and Macautourism inthe future
Macautobecome a world centre .
ingGEG’s E rcnl etrd no a into entered recently GEG and the central governmentcentral the
serviceoffering to include
entirebuilding area GEG’s business inbusiness GEG’s
h poet will project The
Page Page
kilometres and 13 GEG .
to be to of of s of of s 29 ’ s
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se total revenuewas paidby gamingwins CityClubs issmall, isit importantto note thatthis revenue PhaseMacauI, We Source: Figure forthe house with lower win percentage StarWorldMacau’s VIP volume increased12%,but net win increasedonly2% over thesame period last year dueto Macau Galaxy segment, VIP the gamingmasssegment, whileVIPexperienced growthrecord challengingina wheremarket entirethe market slowed.has Clubs. market share in the mass segment (13.3% as at 3Q14). Ove Source: Figure alsocompetition from we year2016 insteadof 60%just of theyear as in2015, GEGincrease14.3% in We e
don th forecast 2016revenueforecastgrowthGEGdriven 10.7%, of increaseGEG 17.2%byin estimate that 94 that estimate r the pastthequarters, 7r GEGhasconsistently increasedits VIP share market(25.7% 3Q14) whileatas maintaining e The Gaming Inspection Gaming The the las - - Bothof ’
20 19 t expect gaming revenue growth to move i the t Company
: : pag GEG Mark GEGTotal Company , e is essentiallyis fo GEG r , Guotai Junan International Junan , Guotai 33. disclaimer from its hotel ’sflags 7 . %fromStarWorld .2% of GEG of .2%
US$16.0
In In etShare NetRevenue ’ 1H14 and s effectives
hipproperties
all
Coordination Bureau Macao SAR Macao Bureau Coordination , “
operating
billioninnew casino projects slatedto open in 2016. 94.7 and 10% 15% 20% 25% 30% 100 120 0% 5%
20 40 60 80 HK$ bn ’ s civd two achieved 0
%of GEG construction materials.
2014 gamingtablecapacity. .
19.1% 13.1% 1Q13 .
2012A
, StarWorld, Macauand MacauGalaxy (Phase I), Macau profit 56.7 37.8% revenue was f wasrevenue ’ ” s revenues wasderived from itsgaming operations, 14.0% 19.1%
2Q13 since
and n osctv qatr o rcr vlm in volume record of quarters consecutive VIP 2013A - 66.0 step exactly with that of capacity as there will be some cannibalization and 16.4%
increasing operating 0.3%from Revenue 13.7% 19.6% , the Company , the 3Q13
, which , is GEG rom its gaming operations,gaming its rom 2014F
9.7% 72.4 13.3% 20.8% Galaxy Macau Phase II and Broadway will be open for the fullthe openforbeBroadway willand Phase IIMacau Galaxy 4Q13
’
and s market share does not include gaming revenue from its City effectivehotel room and gaming capacity for2016. However,
the CityClubsthe .
determined administrativeexpenses the of 21.0% 2015F 13.7% 22.6% 1Q14 87.6 Mass Mass Market YoY 2Q14F 12.9% 23.8% 2016F 97.0 10.7% as percentagea of . Althoughrevenuethe contributionfrom the
3Q14F 13.3% 25.7% 10% 15% 20% 25% 30% 35% 40% 0% 5% ’ of s hotelnightssroom capacity and
reported which
h frt w qatr o 2014. of quarters two first the andonly
66.0 the Ci decent ty Clubty
CityClub casino %
was from was 2.5 1H14 c % asinosare not
and gainsin Page Page badluck
2 Galaxy 14 .7% s of of ’
net the
29 of In
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se continueddeteriorate to in4Q14, mid sometime open will which City, Studio and 27 May on opening II Phase Macau Galaxy 2015, revenu opened We share( upwasshare 0.4% Macau qoq 3Q14, In StarWorld Macau casinohotel resorts t integratednew the attractingcomparedcustomersto timehard ahave will Club casinos restaurants H Waldo properties, spa hosthotels for attractive gamin integrated more newer from competition of face the in revenue declining hotels, host their at options increased GGR industry as even I CityClub Casinos Source: the Figure 1H14, n e 2014F
, th forecast . e In 3Q14 In gymnasium, qoq Gaming ’ e to dec to e las - upslight s total VIP GGR. In the mass segment, StarWorldsegment,Macau mass the In GGR.VIP total s 21
optn casinos competing t Company
StarWorldMacau : GEG pag decline for the sector. The strong performance in both segments meant that i thatsegments meant both performance in strongsector. The the declinefor G and ’ EG e net , revenue to continue to decline going forward as the City Club 0.8 GEG fo line in 2015 as customers will be attracted to the newly renovated VIP area of Wynn Macau opening in Feb.inopening Macau of areaWynn renovatedVIPnewly the attracted to becustomerswill as 2015 in line StarWorldMacau ’ ly from 3.2%2Q14 in
s ofcoursegaming entertainmentas options. r ’ , Guotai Junan International Junan , Guotai
g resorts. g s
gaming disclaimer ppt Clu City from revenue
Net
Hotel 2013A and ’ s hatwill be otel threeCityClub casinos, only Rio hotel has yoy 2.5% Revenue
2.7% nor etd wmig pool swimming heated indoor
( revenue and 0.5 ppt0.5
3.3% ntrs f netimn pin, fte three the of options, entertainment of terms In
’ 3.7% s Construction MaterialsConstruction & Other
93.6% we net gamingnet 94.2% n also and open oe Peiet Mcu ny ha only Macau Presidente Hotel ’ s Breakdownby Business w
xet h Ct Cu csns il have will casinos Club City the expect yoy VIP
ith Macauith decline
ing ). by
) .
gross win managed to increase managedtowin gross
to 6.9%to startingthis year. 12.6% due to to due b
revenue increasedrevenue of
’ s GGRdown 8.8% casino 18 . with ih iie entertainment limited With .3 eeirtd vrl mre conditions market overall deteriorated % in 2015for%in 9.7%VIPshare(up market declined s T .
We
e te two other he Source: Source: the Property Figure
expectCity qoq 4.0 sauna 0.5% ’ StarWorldMacau 2.0% by increasedwin gross 3Q14 s 2014F e bars, ve Galaxy Macau Galaxy Phase I % .
- qoq 22 yoy by 3.6% by and Company, Guotai Junan InternationalCompany, Junan Guotai : 33.7% s
GEG
even while even 37.5%
’ Figure Source: Source: ClubCasinos qoq s from 8.0% in 2 8.0% fromin
135 140 145 150 155 160 165 170 175 Gaming 2013A HK$ mn
, much better than the 14.4% decline in 14.4% the thanbetter much , as someas marketnewlysharegoes to the Company -
23 2012A Mac n 3Q14 n StarWorld Macau StarWorld : Revenue 0.3% 0.3% 27.9% GEG au YoY GEG Revenue from City Clubs .
2013A We
’ Q1 s 12.4% , StarWorldMacau, , Guotai Junan International. Junan , Guotai
’ Rvne rm its from Revenue s total 4 e ) and 3.3%andmarket mass ) 2014F xp - - year. Breakdown by . 1.0%
ect GGR 62.2% qoq 2015F -
5.0% trol Macau StarWorld n addition, In City City Clubs & Other 66.0% , comparedt , declined 8.8%declined
2016F - 7.0% Page Page ’ s market s 15
- - 10% 15% 20% 25% 30% 0% 5% GGR
10% 5% of of City o a o 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: and Figure alsovisit P StarWorld Macau we e StarWorldMacau We VIP marketshare (up thesector. segmentthe mass In 8.8%. In Galaxy PhaseMacau I Source: Figure 10 15 20 25 30 35 40 45 50 10 15 20 25 xpect HK$ bn 0 5 HK$ bn e 0 5 3Q14, Galaxy PhaseMacau I
expect the decline to be less than that of th
forecast Growth e In 3Q14, Galaxy Macau Phase I the Company, the Company, 101.9% las - - 2012A Galaxy MacauGalaxyPhase I 2012A - 26 24 Galaxy Macau Galaxy Phase I Net Revenue Gaming 31.6 4.7% 21.1 t StarWorld StarWorld Macau Net Gaming Revenue
: : pag hase I. Asa result, Galaxy MacauPhase I StarWorld
e e gaming net fo r 2013A 2013A
disclaimer Guotai Guotai 38.5 and also because 23.1 9.9% as 21.8% , Galaxy MacauGalaxy Phase, I slightly we GalaxyMacau Phase I
N Junan International Junan Junan International Junan
e expecta t Gaming
16.8% 2014F
2014F
44.9 revenue 23.0 -
0.5% from reven ’ s
15.8 net gaming - synergisticeffectPhaseof shouldII partially Net 2015F we
14.6% 2015F Revenueand Growth ue to decline2015asincustomers to uewillattractedbe the to 38.3 - decline 18.8 18.3% ’ . . s VIP gross win
%2Q14) in and expect some visitors to the Company Gaming StarWorld Macau
- - 2016F ’ ’ 11.9% 2016F of 3Q14grossincreased win s by s 18.5% 33.8 15.3 3Q14 revenue 14.6 Revenue i 21 fr aay Macau Galaxy for 2015 in % YoY market sharewas up fell - - 100% 120% 20% 40% 60% 80% 0% - - - - 10% 15% 0% 5% 10.0 YoY 40% 20% 20% 15% 10% 5% slipped
13.5
% % mass marketshare (up from
since % Source: Source: Figure Source: Source: Composition Figure qoq
8.4 2015F Galaxy Macau ( , % in Guotai Guotai - - 2015F qoq 25 27 - line with : : Galaxy MacauPhase just StarWorld
, , in Junan International Junan Junan International Junan ’ s new Galaxy Macau 25.9% 17.8%
1.6 - Gross Win Gross line with 0.
% the 14.4% decline in Macau 18.5% 1 Gross Win Gross Mass Mass 2014F
ppt 26.6%
qoq P Mass Mass offset hase I) P Net Slot Gross Slot Gross yoy ae I hase , compared0.4% , a to
Macau 0.7% 0.8% Win 2014F
. . GamingRevenue Composition somemarketshare ( 9.7
2.3 Slot Gross Slot Gross
is a n ls ta te erae for decrease the than less , 3.4% % % in2Q 3.5% Win
VIP Gross VIP Gross competingcasinos.However, ppt ’ s total GGR 80.7%
P ewer property Win I yoy hase II and Br Net 14). 81.4% ) ) to GamingRevenue VIP Gross VIP Gross
70.0% 13.8 Win 70.7% ’ s total VIP GGR. qoq qoq % with %
compared to decline Page Page oadway will
d declinefor ecline of 16 15.9
. of of
We 29 %
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Figure playa strategic role ROUGE. Guestswill also including n from non We B Source: and Growth Figure being of a fresh and new casino and al hotelcapacity, 2011 planned to t disclose 1 andmachines slot revenue ComparedPhase to I, Galaxy Macau 10 15 20 25 30 35 40 45 inety secondinetywalk viaan air - roadwayat Galaxy Macau HK$ bn 5 e th do not expect Broadwayexpectnot do , e giving Guotai Guotai las - - 2012A 30 28
due to focus on higher end customers t Although - e ubr f aig als n so mcie a is casinos, its at machines slot and tables gaming of number he divers a as well as rooms hotel 320 : : pag gaming sources have Galaxy Macau Galaxy Phase II Revenue Galaxy MacauPhase NetII GamingRevenue Broadwayat Galaxy PropertyMacau Revenue and Growth
Junan International Junan International Junan
it higher gaming e fo we
PhaseI beable toenjoy existing attractions of Macau’s only10 screen 3DCineplex, UA GalaxyCinemas and CHINA r capacity
2013A disclaimer expectwillsomewhathaveit highergaming revenue comparedPhase sinceto Iwill haveit advantage the we giving Gal , 250 do not expect Broad I we
for more than 600 gaming tables five
2014F . .
expectGalaxy Macau .
GEG - and hotel capacity compared to P - conditionedpede star hotelstar axyMacau Broadway / critical massand
at Galaxy Macau Galaxyat 1,000 1,200
HK$ mn 200 400 600 800 has not announced any table or slot 2015F 0 25.7 soas willittarget high rooms 2012A way to have any gaming capacity 66.5% 2016F Broadway Broadway Total Revenue
42.7 strian bridgestrian from MacauGalaxy on May 27, 2015, 27,May on ary f netimn venues entertainment of array e
. ( 2013A “ Galaxy Macau PhaseI YoY Broadway 10% 20% 30% 40% 50% 60% 70% 0% ,
1,500 slot machines I to openwithtogaming lessI capacity butearn to mor 2014F
er hase II
” spendinggamblers. Composition Figure Source: Source: )
to have any gaming capacitygamingany have to 2016F targeting Phase II is expected to 2015F .
543 Although Guotai - machine making 2 26.1% 9
:
Market Market Win Galaxy MacauPhase NetII GamingRevenue , a we customersvaluehigher
Junan International Junan 26.0%
2016F s an extension of Galaxy Macau, Broadway will 1,025 Mass Mass 89%
it know and we . Broadway. willnonhave capacity for Broadway, which is
, including , a must 2015F Yoy expect Phase willII have less gaming and 2,200 hotel rooms that 100% 20% 40% 60% 80% 0% Machine Machine - 2.8% seedestination Macau. in 3.2% Win Win Slot Slot
open with aay aa Pae hd been had I Phase Macau Galaxy
.
3,000 a
,
but . Although GEG does not doesAlthough GEG . VIP Win VIP Win - 500 gaming tables, 1,000 70.8% et rawy Theater. Broadway seat
when it opened to derive all revenueall derive to - gamingattractions, 71.1%
located just a Page Page e gaminge
17 in in May of of 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se labor fornew casino propertie Moreover, w had it that announced GEG 1H14, 1H14,respectively.and 2013 2012, expenses.employeehigher on 2016 in 88.0% We Expenses ba 99%. at HK 2.0 We Source: Figure increaseits 2014, into continued 2013 of st half a second with together the in noted first areas geographical certain in prices slag and cement conti period. theduring performances marketdemand forcement inthe halffirst of the year remained strong, and all infrastructure continues to enable the business to capitali entertainment and leisure the of expansion from thisincreasing demand. expenditureofabout capitalworksstimulusinexpenditure over to entering Kong for t million, We e sisat theresort’s threeluxury hotels averagednear capacity at 98%. $181 million,in linewith thesame period lastyear. % and th he forecast forecast2014operating expense to revenue ratioof 85.1%, forecast nue e the las - c 3 onstruction At s representing 1 t Co
: 1.8 pag to invest in invest to Galaxy MacaGalaxy
GEG mpany, profitcontribution over thecorresponding period lastyear. ith Macau 2014 % of total revenue, respectively, and equivalent to e 2014
fo their constructionthepeaks, their r
Revenuefrom disclaimer International Junan Guotai og ou o cs laesi, nbe te iiins rud rnltd blast granulated ground division’s the enabled leadership, cost on focus rong - - 2016 2016c m HK
aterials ’
opportunities to generate additional stable revenue streams in Yunnan.in streamsstablerevenueadditionalgenerate opportunities to s 3.3%,2.6% and 2.3% of total revenue, respectively,and equivalent to unemployment rate currently at just 1.7%, $40 billion$40 in thepast five years. CMD’s strategically located u, 1H14 hotel1H14u, hotelrevenue of HK$1
onstruction
InMacau, thedemand for construction materials from infrastructure,housing d s. ivision(“CMD”) was
1,000 1,500 2,000 2,500 3,000 Construction MaterialsDivision Management HK$ mn 500
Despite decreasing in 1H14,Despitedecreasing in 0 extended
.
revenue 3% increasedby m aterials 30.2% 2012A 2,050 Sales Sales of Construction Materials g
HK overnment’s2014
distribution and production established well CMD’s robust. remains sector, nw mlye eeis akg fr all for package benefits employee new a remain , exceedifarthe nextofyears,eachbillionfew for $70 857
d GEG 2013A HK 2,412 ivision
million,HK$2, 17.7% Hotelroom occupancy remainedat near capacity throughout theperiod $1 s
’ s confident inconfident z .0 e on the employee
billion, revenueHK of 2014F 2,426 0.6% - 2015 budget announcedin budget2015 yoy
we up 0.6% growing demand. we
6.2
increasing expense to revenue ratio revenue to expense 005 its
2015F
to to expect it to become more expensive to hire incremental forward.increasegoingtoexpense expect thisratio 2,620 8.0% % CAGR.
growth prospects in the Yunnan cement market and marketYunnancement the prospectsin growth
HK millionand HK$2, $2,426HK$2,620million, HK$2,829 millionand yoy $744million . of GEG 2016F
2,829
8.0% Withthe majo to 86.5%to 2015in andfurther
StarWorld Macau YoY
Mainland China
operationsare well positioned to benef ’ s
10% 15% 20% 25% 30% 35% 0% 5% cement jointventures delivered and h and f its of
166
February 2014, providedfurther2014,February rinfrastructure projects inHong otel occupancy on a combinedoccupancyaotel on
Generally improving trends intrendsimproving Generally was
million,
5.5%CAGR. 600 Macau 16,000
hotel - unc sa bsns to business slag furnace 7.2%, 6.8 7.2%, , , i n Yunnan Provinc ng the ng revenue representing
and thecontinuing
averageannual % and %
1H14 revenue increasingto
in in Page Page employees 1H 6.6 14 was
18
which 2.5%, e, the
% in in % solid of of 29 In it .
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se non 2018 till 2014 from activities Macau’ GEG MacauPhases 1H14. in million HK 2H13 inbn Most of end2013yearHK$11,279HK$6802013,reducingfrombyjust it96%2012 tomillion in end byyear debt total at itsmillion 2014 very has GEG As Source: 2 Figure certainpercentages of 32.5%,30.9% a C machines. 3) of e a an 2013 2012, in 37.2% GEG xpense to llowances 20% 30% 40% 50% 60% 70% 80% 90% ommission e 1) variable and fixed payments to the Macau Government based on the number ofnumber the on basedGovernmentMacau the paymentsto fixed andvariable $348
- th gamingprofi ’ ’ - 35% e s effectives taxwasjust 0.6%,rate a whichtaxes, gaming is expenseoperating greatest s 2016, respectively,equiv the Commission & Commission Allowances ExpenseOp. Total las - s 32 the
million at 30 June 2014. June 30 at million and other operating expense. t Company, 2012A 32.5% 36.5% 86.6%
opeetr Tx on TaxComplementary : gaming tax pag .
GEG debt reductionwas in thesecond half of 2013 as AsJune2014,at30, GEG e and fo g three nd31.6% r aming We tsremain subject tothe Macau Complementary Tax
OperatingExpenses / disclaimer International Junan Guotai
a 2013A 30.9% 36.7% 84.6%
lwne to llowances do expect the Company to take on more debt, however, in 2016 as it steps up investment in Galaxy in investment up steps it as 2016 inhowever, debt, more on take to Company the expect do little
and four.and on net gaming wins
netgaming wins or rolling amount c ounterparties
of total revenue 11, respectively. 1H14, d debt,
2014F 31.1% 36.8% 85.1% a rol (a alent tojust 0.4%, 0.3% and 0.5 we
As a result, GEG result, a As g Gaming Taxes Gaming l casino - aming oeat iac css f HK$43 of costs finance forecast vr f h sm exemption same the of over rw aeil ad osmbe, ercain n amortization, and depreciation consumables, and materials raw ,
.
We ’ s netgearingnetposition,cashs was ata withHK Net ; ; 2) 2015F 31.3% 37.1% 86.5% - expect gaming taxes to net gaming revenue ratio to be very stable 0.2%and2.4%20132012, in andrespectively, 1H14, as in 2012, in 2013 and1H14, respectively. 4% public development and social related contributions Revenue income c ounterparties
GEG 2016F 31.4% 37.2% 88.0% ’ s finance costs decreased from HK$199 million in 1H13 to just HK$17 just to 1H13 in millionHK$199 fromdecreased costs finance s .
,1 of GEG ’ o s andis
eaig expenses perating GEG prepa
s xmtd rm aa Cmlmnay a o is gaming its on Tax Complementary Macau from exempted is s h scn gets oeaig expense, operating greatest second the is 2 Figure Source also 10%
% ofoperating profit ineach year. 0% 2% 4% 6% 8% s a p a s . expectedbe to quite stable t had it :
the - ercentage of total revenuetotal ercentageof 33 idHK$3.5 billion of borrowings 2012A 3.2% 5.5% 7.2% Company, D&A Expense Employee : ilo, K4 mlin n H and million HK$40 million, GEG rm 09 o 2013). to 2009 from
c OperatingExpenses /Net Revenue, 2 of
Guotai Junan International Junan Guotai nit f aig taxes, gaming of onsist 2013A
3.0% 5.5% 6.8% C ommission Companythe $14.4billion 2014F 3.0% 5.5% 6.8% .
and
oee, the However, ’ s gaming s
on net gaming wi was 36.5%, 36.7% and 36.7%36.5%, was
in cashin a TheCompany reduced .
llowances GEG in1H13 and HK$10.6 Raw Materials Other 2015F 3.0% 5.5% 7.7%
e K$61 c
mployee
is exempt is from since it consists ommission and debtandofjust tables and slot andtables qiaet to equivalent
Page Page is
Company’s ilo in million based on 2016F 3.5% 5.5% 8.6% ns b 19 enefit ; ; and of of and 29
.
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se payoutra 31 on HK$2.29 per share, strongoperatingWith cashfl Source: Figure cost, means amortization 8.9 We respecti employeebenefitrevenue to ratio, billion, deteriorated However,results margin. EBITDA adjusted flat and of We Dividends EBITDA N and 10% 15% 20% e 0% 5% 4.8 % th forecast2014 f orec e
and %, the July 2014 July las - up Adjusted EBITDA Adjusted Margin Profit Operating Margin 34 vely t tio for1H14 of 81.7% an Company ast 2014ast 11.7 2012A 13.0% 13.4% 17.4%
: just pag - GEG 2.8 .
that my forecast callsfor a 2.8 expens e % and % 1 %, respectively %, fo
.0 . Then, on 112014,NovemberonThen, GEG . r
, Guotai Junan International Junan , Guotai
Profit Margins disclaimer % - - 2016 adjustedEBITDA of HK$ 2016 2013A e in 2016, equivalent2016,e in to 3.5% of totalrevenue, 3.0%fromup in 2015.This 19.0% 15.2% 15.4% yoy implying 4.1 e t Incomet
%, respectively.%, as adjustedEBITDAasdeclined margin diluted
6.5 2014F 18.2% 15.0% 14.9% . ows and net cashpositionnetand owsexpected through 2016,
With Galaxy Macau and Broadway open for the full year,full the for openBroadway and Macau Galaxy With EPSHK$of destimatedan 2014 dividend % we
2015 Net Profit Net Margin Profit . forecast
2015F 13.6% 13.5% 16.8% dividend yield. GEG %dip in2016 net incomedespite a 4.1%increase in 2.533 2014to2016 ’ s adjusted 13 , HK$, 2016F 12.0% 12.0% 15.8% . announce 2
billion,HK$ 2.75
GEG paid its first EBITDA
adjusted 8
from 19.9% in 3Q13 to 18.9% in 3Q14. in 18.9%to 3Q13 19.9%in from and Figure Sou d yield 10 12 14 16 18
0 2 4 6 8 HK$ bn another somewhat rce: the rce:
in HK$ 14.7
of crease 7.4 EBITDA margin - 71.3% 2012A 35 6.0 145.6% 2.
Company, Gu billion and YoY Shareholders' Profit 9.8 : s 675 % GEG pecial dividend d 25.9% d
.
n Q4 we a when 3Q14, in , respectively,, representing 10.1
27.7% 2013A EBITDAand Net Profit d 12.6 36.2% ividend otai Junan International Junan otai , a special dividend
HK$1 yoy decliningto we
10.9 in 1H14 on1H14 in 2014F
4.8% 8.4% forecast2015dividtotal 5.3 of we 13.2 HK ,
billion,representing growth jse EBITDAdjusted combined with higher finance expect higherexpect adjusted $0.45 per share,per$0.45 18.2%,16.8% 15.8%,and 11.9 11.7% 2015F 9.5% strong 14.7 .
With higher expectedhigher With of YoY EBITDA Adjusted
EBITDA. HK growthof 11.7 revenue growthrevenue $0.70 per share 2016F 4.1% - depreciation 2.4%
15.3 wa Page Page
implyinga s
endsof HK$3.3 20 - 100% 120% 140% 160% 20% 40% 60% 80% 0% 7.9 20% of of %,
29 &
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Macau to mainlanderscan visit Macau within a given time, likeit did in restrictionsChineseaddition,visaenactligovernmentcoulddays.theIn five tosevendays from 2014,1, effectiveJulyfrom Beijing, Chinese The Macaugovernment could also increaseits tax rate on gaming revenue. exte extendnotmight gaming activities 2014from 2018 till T assumingconcessionaires remain compliant with laws and regulations and leisuresector, concluded that thereis little r where it met with government agencies, a Fitch Ratings agency team led by thegovernmenttransferredMacau w to June in extended, its redemption r The continueindefinitely, which could lead to furtherdeclines inMacau anti its accelerated government Chinese the as 10.9% Macaucorruption.engage in to want government mustfurther push forward its battle corruption a delivered Beijing II add moretables. 2015 Phase II is expected to add 500 gaming tables, 1,000 slot machine expected.capacitythan gaming less with II Phase Macau Galaxyopen might GEG RISKS ax exemptionax , which , would result in lessgaming revenue e th dd a nt on s wud eue Macau reduce would so doing not as nded, Company . e
Each of the six casinoconcessionaires Eachsixof the las ’ songoing . t
. pag
Premier speech e government fo
might notmight might r
ight in 2017
It is uncertain that theCompany will getthe requested the disclaimer
anti 02 al of all 2022, anti the although that out pointed Xi t the at exemption upon expiry in 2018.exemptionexpiryuponin
not be extendedbenot - corruptioncampaign
secureextensionof
fifth rMcu could Macau or .
The Company’s h Company’s the lnr session plenary
Macau (a ’ s Gross Gaming Revenue (GGR) declined by 2.6% in 2014, with VIP GGR decline ofdecline GGR VIP with2014, in 2.6%by declined (GGR)Revenue Gaming Gross s n extensionn ithout compensationithout to
whenexpiresit in2018 reduced the number of days Chinese visitors on transit vis transiton Chinesevisitors days number of thereduced
than we than expect
Macau in
increase gaming couldhamper Macau
iskthat
againstcorruption to fosteran
its aig prtos n rltd qimn i Mcu il e automatically be will Macau in equipment related and operations gaming
’ cmeiiees oprd o te gmn jurisdictions. gaming other to compared competitiveness s emphasiz of thesame exemption hadit from2009 to 2013). T gaming
We concession agreement expires in June 2022. Unless industry
is allotted a certainallottedtables,aapproval fixedandgetofis amount to must restrictions - corrupti believe - orpin apin ae osdrbe rges n 04 the 2014, in progress considerable made campaign corruption ing the need to to need the ing . 2008 concession in 2022concessionin
the Company.the concessionswon’t be renewedupon expiration in 2020
n apin W epc te rcdw on crackdown the expect We campaign. on
it is likely thatlikely is it ’ s and 1,250 five . when s
GEG
GGR. ’ sgaming revenue on .
increasefor it
Guangdong residents is exemptedis Macaufrom Complementary Tax on mainlander
Michael Paladino, head of Fitch’s gaming, lodging ciey exp actively
However,MacautoJunetrip 2013abased on environment GEG - ,
star hotel rooms or Macau governmentMacauor
gaming will be able to have its tax exemptionstaxhaveits to able bewill ia to visas . and
OnJanuary 13, GEG
whereofficials don
tablesat Galaxy Macau Phase n deepen and werelimited ’ s Macau
miting the number of timesnumberofthe miting US$2.5 bn Galaxy Macau Galaxybn US$2.5 when it opens heMacau government as can stay in Macaustayin can as .
ih rsue from pressure With Premier to twotrips the might h fgt against fight the ’ t dare t or
concession is oee, the However, corruption to to corruption Page Page on May 27, exercises XiJinping 21 - ayear 2022, even of of
its 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Bl Long termgrowth rate WACC E/(D+E) D/(D+E) AfterTax Cost of Debt EquityDiscount Rate Adj.Beta MarketRisk Premium MarketReturn RiskFree Rate Table So Weighted Average Average Simple Corp Belle Grp Entert Echo Res Bloomberry Genting Malaysia Genting Singapor Other Weig Average Simple Gaming Penn Natl Inte Resorts Mgm Las Vegas Sands Of Capri Isle Entertai Caesars Corp GamingBoyd USA Weighted Average Average Simple Ltd Sands China Holdings Ltd Sjm CrownMelco MacauWynn Entertain Galaxy Holdin China Mgm Macau Operators Company Table shareof HK$ equivalentto is 8.8%discount U.S. peers.to EV/EBITDA2015 We 17.2x L averagehistorical trad currently is sector gaming Macau The V ooking at the forwardthe at ooking
urce: Bloomberg, Guotai Junan International. Junan Guotai Bloomberg, urce: e ALUATION
hted Average Operators th set GEG set -
Listed e
- - anda 28.3% discount toU.S. peers.
5 4 las
: : oomberg, the Company, Guotai Junan International. Junan Guotai Company, the oomberg,
GamingSector Peers Comparison DCFValuation t Ente Ltd
pag
51 ’ e s initial investment rating at ratinginvestment initial s fo
. BEL PM AU EGP PM BLOOM GENM MK GENS SP USPENN MGM LVS US ISLE US CZR US BYD US HK 1928 880 HK MPEL US 1128HK 27 HK HK 2282 Code Stock 15.1x 2014 / 13.9x 2015 / 14.3x2016 2015/ 13.9x 2014/ 15.1x 21 r disclaimer . . GEG is currently tradingGEG is
level US
PE ratio, PE
of 14.1x, but a 3.1% premium3.1%acomparedU 14.1x, but of to
PHP AUD PHP MYR SGD USD USD USD USD USD USD HKD HKD USD HKD HKD HKD Crncy
O
urtarget price t h 31.400 20.825 17.380 35.000 14.880 10.50 15.76 19.59 51.42 13.23 14.19 9.960 e sector is currently14.9 trading is sector e Price 4.39 4.57 4.04 0.93 9.61
HKD mil HKD 318,798 253,343 148,818
22,433 20,329 48,240 63,129 74,730 10,772 12,043 56,333 87,902 90,298 56,544 M 8,135 9,749 4,112
- Cap at 9.7x forward EV/EBITDA,9.7xforwardat wh
“
is equi is
Accumulate
ing at at ing
Hist AvgHist 13.92% 13.19% 11.44% 21.3 25.1 45.9 17.1 24.0 14.9 23.7 19.1 29.7 31.2 18.5 39.6 17.2 16.7 17.3 13.0 20.2 17.5 17.7 14.4 Fwd valent to 12 13.7% 97.3% 1.75% n.a. n.a. n.a. 3.0% 2.7% 5.1%
PE.
owr E/BTA of EV/EBITDA forward 1.1 20.3 17.2 13.4 12.5 20.7 23.4 38.8 18.6 20.2 18.4 21.1 22.7 32.9 33.5 42.9 16.6 20.7 50.9 14.9 14.7 14.6 10.4 Fwd n.a.
Our target price is apricetarget isOur ”
with target price at HK$ at pricetarget with
PE 18.8 13.2 13.3 24.2 28.1 38.8 35.4 24.8 19.3 22.0 14.6 14.6 14.6 13.1 12.7 12.8
14F n.a. n.a. n.a. n.a. n.a. . 9.9 8.3 6
Current x NAVper share (HK$) Shares Outstanding (mn) (HK$ mn) EquityValue - (HK$ mn) EnterpriseValue (HK$ mn) PV+Terminal Value Sum ofPVFCFF (HK$ mn)
2014 x, which is a 1 a iswhich x, e et(ah (HK$ mn) NetDebt/(cash)
21.8 17.9 13.8 12.5 17.6 16.7 18.6 18.9 16.4 18.6 22.1 33.4 33.5 40.2 16.4 26.2 50.9 15. 15.2 14.8 10.4 11.0 n.a. 15F
3
/ . S 11.3 15.6 14.6 12.2 15.4 14.2 17.5 14.2 14.5 16.6 18.2 23.6 21.4 29.2 15.0 21.0 31.5 13.3 13.1 13.6 10 11.9 16F n.a. 8.4 ich is an 11.6%an Macauis discountpeers ich anand to .
.9 casino
x 23.8 2015
11.0x, which is a 22.1% discount to to discount 22.1% a is which 11.0x, 3.7 Hist AvgHist % operators % discountt % 12.6 15.8 14.1 13.2 12.3 16.5 35.5 19.8 12.0 14.1 13.4 15.1 Fwd 11.8 11.6 11.2 1 / 7.6 7.9 9.5 6.8 6.9 1.3 9.0 9.6 discount to our DC ourdiscountto 39.0 10.8
0 14.8 10.4 14.7 34.2 14.0 10.6 10.7 10.7 10.6 11.7 Fwd 11.0 11.0 11.7 x 9.7 9.7 8.6 8.3 8.4 9.4 7.6 7.1 9.0 6.1 , whi , 2016
EV/EBITDA
, currently 124.6 ch is is ch 16.4 10.2 15.3 34.2 14.0 10.5 14.3 41.2 12.1 10.7 83.0 12.8 11.0 11.4 ofaveragehistorical the o 11.5 11.8 11.3 14F
7.9 9.7 8.1 8.6 5.9
EV/adjustedEBITDA and Current
10.3 15.4 10.0 10.7 10.9 10.9 10.9 10.9 11.8 11.3 11.9 15F equivalentto
8.6 8.7 8.4 8.8 9.5 8.3 8.4 9.6 8.3 7.5 9.2 5.8 F derivedNAVF per
trading at 10.6x.tradingat 12.7 10.0 10.1 10.3 10.8 11.3 16F
7.8 8.5 7.4 7.3 5.9 8.3 7.4 7.1 7.5 9.9 8.7 6.6 6.8 8.6 9.9 9.7 7.2
Page Page
ROE 10.8 62.7 25.7 66.7 10.0 12.6 16.4 24.6 26.3 25.3 31.8 81.3 22.5 34.9 37.1 34.3 22.5 14F (%) (11,190 217,721 206,531 6.8 8.5 6.6 7.3 6.7 2.2 142,118 64,413 22
51.21 4,252 11.3 of of (0.3) 13.1 11.0 14F PB its 1.6 1.9 1.8 1.2 3.9 1.4 1.2 4.7 4.3 2.0 2.3 5.5 3.4 5.1 5.4 5.1 2.2 2.4 3.2 8.3 29 x )
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Figure 10 15 20 25 30 35 Mar/10 5 e th e Bloomberg, Guotai Junan International Junan Guotai Bloomberg, las - 3 6 t
: pag GEGforward PE (Blended 12 Month) Mar/11 e fo r disclaimer Average BEst 12 P/E (Blended Months) - +1 St. Dv. 1 St. Dv. Mar/12
Mar/13 .
Mar/14
Mar/15
Source Figure 10 12 14 16 18 20 22 24 Mar/10 4 6 8 : Bloomberg, Guotai Junan International Junan Guotai Bloomberg, - 37 : GEG forwardEV/EBITDA (Blended 12 Month) Mar/11 Average BEst EV/BEst 12EBITDA (Blended Months) - +1 St. Dv. 1 St. Dv. Mar/12 Mar/13 .
Mar/14
Page Page 23 Mar/15 of of 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se B Equity Shareholders' Non Equity Total LiabilitiesTotal Liabilities Total Current Other Short & Borrowings & Accruals Creditors Liabilities Current Total Non Non Other Defer Borrowings Assets Total Assets Total Current Balances and Bank Equivalents Cash, Cash Other and Prepayments Debtors Inventories Total Non Other Ventures Joint Assets Intangible Rights Use Land Leasehold PP&E mn) 31at (HK$ As Dec. (HK$) Diluted EPS yoy (HK$) EPS Basic yoy EBITDA Adjusted yoy Profit Net Shareholders' Non to Attributable Profit Less Cred Taxation Tax Profit Before Companies andAssociated JVs from Profits Costs Finance Net Income/Gains, Other yoy Profit Operating Expenses Total Operating Expenses Operating Other Employe & Depreciation Amortization Used & Consumable Materials Raw Counterparties Gaming to & Allowances Commission Taxes Gaming Special yoy (Net) Revenue Materials of Construction Sales H Operations Gaming from Fees Administrative Operations Gaming mn) end Dec. (HK$ Year STATEMENTS FINANCIAL PS (HK$) otel Operations e
- th controlling interests controlling r
e ed Taxation ed Taxation las e Benefit Expense Benefit e - - Current Assets Current t
Payable current pag
it/(Charge)
e fo
r Liabilities
- disclaimer term Bank Loans Bank term
-
Controlling Interests Controlling
AND
21,853 22,294 22,094 15,334 10,327 44,389 18,823 16,300 25,566 18,2 2012A 1,971 1,351 1,104 4,391 5.204 4,966 6,760 6,291
414 139 456 441 190 279 RATIOS 64 41 Income Statement Income (49,164) (18,432) (20,702) 141.9% 145.6% Balance Sheet Balance - (3,106) (4,072) (1,835) (1,017)
56,746 52,817 2012A 81. 37.8% 71.3% 7,426 7,583 2,050 1,867 1.734 1.762 9,847 7,378 (513) (45) 109 246 2% 12 3
32,441 33,054 13,20 11,874 11,412 46,257 14,230 11,752 32,027 23,226
2013A 7.688 1,328 1,975 1,373 1,715 5,107 613 406 846 245 237 369 134 605
(55,894) (20,404) (24,212) 56 (3,639) (4,467) (1,950) (1,223) 10,037 10,138 66,033 61,798 12,575 10,052
2013A 33.7% 16.4% 3 35.5% 27.7% 36.2% 2,412 1,811 2.348 2.387 (598)
141 355 18 11 3
39,003 39,609 13,817 12,930 12,516 53,426 17,784 14,706 35,642 26,908 2014F 9.188 2,166 1,480 1,605 5,030 (61,592) (22,500) (26,677) 607 350 887 423 273 191 404 507 617 (3,991) (4,899) (2,183) (1,341) 11,165 10,826 72,418 68,127 13,183 10,899 2014F 64 2,426 1,857 2.533 2.575 (263) 6.8% 9.7% 7.9% 4.8% 8.4% (43)
174 208 3 9
41,783 42,383 16,712 15,572 15,145 59,095 15,502 11,780 43,593 34,713 (75,760) (27,427) (32,518 2015F 9.785 1,140 2,622 1,588 1,605 4,953 (4,830) (6,717) (2,645) (1,622) 12,232 11,872 87,631 82,996 14,723 11,940 21.0% 2015F 11.7% 600 350 649 299 191 486 613 734 2,620 2,005 2.758 2.805 (288) 9.7% 8.9% 9.6% 77 (40) 206 194 10
4 )
Page Page (85,369) (30,416) (36,062) 24 (5,347) (8,310) (3,438) (1,796) 11,959 11,650 97,018 92,013 10.247 44,013 44,606 19,172 17,204 16,767 63,779 11,053 52,726 43,740 15,325 11,674 10.7% 2016F 2016F - - - 1,968 6,936 2,902 1,695 1,605 4,876 2.679 2.726 2,829 2,166 (282) 2.8% 4.1% 2.2% 1.9% of of (61) 594 350 876 292 800 536 679 808 238 133 87 11 29 4
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source Current Ratio Ratio Interest Coverage Net Gearing (i Leverage Leverage & Liquidity Invested Capital on Return ROE ROA Ratios Return Margin Adj. EBITDA Net P Margin Operating Rate Tax Gaming Effective Margins year endatof Equivalents and Cash Cash of For Effect in Cash Net Change Financing Cash from Other Paid Dividends bo rate of fixed Repayment net loans, bank in Change newof shares Issue Investing Cash from Other ba and pledged in Decrease/(increase) of PP&E Purchase Operations Cash from paid Interest paid taxes Total Capital in Changes Working Adjustments Other amorti and Depreciation Tax Profit Before end Year e th
rofit Margin rofit e : the Company, Guotai Junan International. Junan Guotai Company, : the las
Dec. (HK$ mn) Dec. (HK$ t
. pag e., Gearing)
-
Ex, net Ex,
e fo
r
disclaimer
z
ation
nds
n k depos
its
Cash Flow Statement Flow Cash 1139.4% Net cash (7,516) (5,232) (2,225) 10,056 2012A 122.8% 2,115 1,835 7,426 8,907 (426) (384) (140) (424) 2012A 39.2% 22.9% 25.6% 18.4% 17.4% 13.0% 13.4% 39.3% (60) (28) 104 835 412 (1) (6) Ratios 0
(10,736) (1,745) (8,893) (2,481) (2,178) (4,972) 13,322 10,037 1247.4% Net cash 2013A 4,669 1,340 1,950 9,028 119.8% (208) (387) 2013A 30.6% 37.0% 22.2% 19.0% 15.2% 15.4% 39.3% (26) (57) 105 135 440 2.5% 1 6
4546.3% Net cash (5,209) (4,481) (3,841) (3,846) 137.5% 13,195 11,165 13,172 2014F 29.8% 30.5% 21.9% 18.2% 15.0% 14.9% 39.3% 2014F 4,145 2,183 (792) (102) (193) (230) 1.6% (41) 166 198 110 (1) 0 7
5078.3% Net cash (10,606) (3,262) (9,406) (9,363) (9,759) 16,750 12,232 2015F 99.5% 29.0% 29.6% 21.2% 16.8% 13.6% 13.5% 39.3% 2015F 2,142 2,645 9,910 (240) (934) (256) 1.5% (38) 197 87 25 0 0 0
Page Page 6019.9% Net cash (11,696) 25 (5,048) (2,853) (9,679) (9,932) (9,649) 16,580 11,959 2016F 64.2% 26.6% 27.2% 19.0% 15.8% 12.0% 12.0% 39.3% 2016F 4,862 1,388 3,438 (309) (284) 2.8% of of (58) 609 227 137 25 29 0 0
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Glo Figure gamingcenter still underdevelopment. bridgeslink theP isl China; Zhuhai, borders which North, the c Macau 2013 billion. gamingtaxgrossondirectrevenue bringMOP124.4 about in will billion Portuguesethe newsagencyLu taxescollectMOP140(US$17.5aboutbillion)billionin will 2012, In years40 DiversõesMacao(STDM)de becameopen 1937 in Company” Heng “Tai to granted subsequently was which government’ ope stalls “Fantan”hundred two than more STDM monopolizedgaming from1962 to 2002. Macau isthe only area inChina where casinos are allowed by the gov byeast,bordered the to years400 Portuguese of AdministrativeRegionPRC,ofthe with total areaofonly and Macau, Macau Gaming APPENDIX and e th
has been the world’s largest gam . e
s anymore since they are unified by 4) Cotai 4) by unified are they sinceanymore s las - Additionally, c 1 the
, STDM , : : Macau Geography asinosare 88% of Macau’sof88% GDP be t pag - trotter macao trotter only s e main forpublic bidding fo r monopolized
eninsulaTaipa. to jurisdiction in disclaimer
sourceof in the in ’ sn oeaos pa operatorsasino s - map.svg.
Historical Development Historical
Zhuhaiin administration.
Macau PeninsulaMacau
, bidding, , income.
Macao’s . . With and sa usingsadata12endedNovemberforthemonths on 30. P.R.
Guangdong province to the norththe Guangdongprovinceto Macau’scasinos are all i
83% of Macau’sof83% totalrevenuepublic Chinawhere casinos areallowed onlythe incumbent “Tai Heng Company” In1930, “Hou Heng Company”
gaming market. STDM ing destination in terms of gross gaming revenue since 2006.
d rud O1 ilo i iesn es o gmln tables gambling for fees licensing in billion MOP1 around id Located the rating in Macau. By Macau. in rating won the biddingthewon South and
on the Gaming was formally legalized in Macau in 1847.
Cotai. (5.6 sq. km.), the reclamation area connecting the two “isl two theconnecting area reclamation the km.), sq. (5.6 r “ ern
westernsideof the Pearl River Delta 28.2sqkm isl
Macau and and nthe Peninsula, the historical gaming center,
and
s
other levies on gamingotheronlevies ” the late 19th century, gaming tax century,gaming 19th late the
consistssegments:offour Peninsulakm)1)(9.3the sq. in of
obtainedmonopoly1962concessionthein , and
2) won and wasestablished onDecember20 1999after morethan ernment Taipa
and ,
xie a te n o 16, hn h concession the when 1961, of end the at expired
facing the South China Sea to the eastthe to SeaChinaSouth the facing Macau’s firstcasino gam has morecasinos thanany other regionin Asia
otherMOP14.2indirecttaxesabout bringin will came . and and
3) a newcompany, from gamingrevenue.from
Coloane
in 2013 in
Lusaforecastspercent 35 thatthe ,km60 wih rnt really aren’t which , , according to calculationsaccordingtoby , ing
had already become the becomealready had B Sociedadede Turismo e
across fromHong Kong y
monopoly concession the and
The and 1850s, there were
slot machines slot The governmentThe
Macau Special Cotai .
and For the nexttheFor Page Page and s” , separate
thenew .
26 south Three of of
29 in , ,
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se singletable.a two dealers h Casinosfindingare ways to accrueby 2023 T 2023. end of 2013 approval to add more tables. tables Since Macau (sortof) limits Source: 2014 201 2012 2012 2010 2009 2007 2007 2007 2007 2006 2006 2006 2006 2005 2004 2004 2002 2002 2002 2002 1 1962 1937 1930 1847 Table Entertainment ( EntertainmentHK)(00027 respectively.2006), Currently,concession/subsixtotal of aarethere MGM Gr Galaxy,SJM of eachpermitted subsequently Macau 2002.February in S.A. toSociedade de Jogos de Macau (“SJM” 00880HK, a subsidiary of STDM), GalaxyCasino, S.A., the December 2001, of end the with up opened gaming Macau 970 e
3 development th e
- 2012, t University of Las Vegas Center for Gaming Research, the Companies, Guotai Junan Internatio Junan Guotai Companies, the Research, of Vegas Las CenterGaming for University 1 allowed in Macao. Each of the six casino concessionaires is allotted a certain fixed amount of tables,of amount fixedcertain a allotted concessionairesis casino six the of EachMacao. in allowed las No new casinos opened. casinos No new S S S Encore Macau Dreams of City Macao Venetian Gr Gr MGM Melco Crown Wynn Macau Gr Melco Crown Wynn SJM casino, opens its first Galaxy Entertainment S to permitted Galaxy c gaming Casino c gaming Casino c gaming Casino Lisboa Casino e Diversões Turismo de Macao Sociedade (STDM) to de concession monopoly awards government Macau Macau to baccarat which introduces Heng Company, Tai to awarded monopoly Casino Compan Heng The Hou Macau in gambling legalizes government colonial Portuguese he incremental cap is set to be liberally applied such that new tables will be allotted from the total nu total the from allotted be will tables new that suchapplied liberally be to set is incrementalcap he : MacauCasino Timeline and and and and and t and and pag sells , s Cotai Central s Cotai Central s Cotai Central s Cotai s Macao
sells Par
when in actuality the number of tables increased to 5,750. he and e Lisboa Waldo
Anotheris fo and 06883HK
ratherthan be Macao sub adise S.A. (in April 2005), Venetian Macao S.A. (in Dec. 2002) r
ling twic and sub oft disclaimer
Macau Entertainment opens opens Entertainment Entertainment -
opens
(Galaxy Entertainment) opens Entertainment) (Galaxy Gr MGM to concession opens casino opens (SJM) casino - industry.he Therewere totala ofbidding 21 proposals received, outofwhich concessions we
conces (Wynn (Wynn (STDM) opens (STDM) Macao (Melco Crown (Melco on on on
(S numberof Gaming Inspection cession cession cession and
sell e the normal number of players, but because each dealer uses a common drop box, it only counts as
.
‘FastActionBaccarat’ (FAB) tables opens , the fi ,
and
, Wynn Macau (01128 HK), S HK),Macau(01128 ,Wynn P P P
sion to to sion Macau
hase hase I hase
s y wins a monopoly concession for operating all games of chance all games operating for concession a monopoly wins y
sub had decided to grant out three However, the cap has proven to be flexible, since th
China
MPELUS).
strictlyrolled atfixed quantities per year circumventthe
. rst American rst awarded awarded awarded -
acquires acquires concession to concession I I ) opens ) I I subsidiary of subsidiary
open . Entertainment B A History casino table ) opens )
open open . Crown Casino (now (now Casino Crown s in in s
to Wynn Resorts (Macao) S.A. (Macao) Resorts to Wynn S.A., Casino, Galaxy to Maca de Jogos de Sociedade to . Mocha and
s in January 28, 2013 28, January in s September in s .
April 201 April
- and run casino in Macao. in casino run
Paradise Venetian Macao S.A., which is now owned by S owned is now which S.A., Macao Venetian Melco Crown Ent. Ent. Crown Melco Galaxy Waldo Galaxy
.
) opens ) Coordination Bureau
slot lounges slot tablecap.
additionsthrough 2023to totalof 1,400 (7,150 totaltables in operation) TMs aig monopoly gaming STDM’s 2
, which is now owned by MGM China (02282 HK). (02282 China MGM owned by now is which , .
2012, and Casino Altira Casino .
Forexample,double gaming concessions .
s China (01928 HK), MGM China (02282 HK)ChinaMGMHK),(02282 (01928China s
. ,
which is now owned by Galaxy Entertai by Galaxy owned now is which . Theseven
( MPEL US MPEL , which is now owned by Wynn Macau (01128 HK). (01128 Macau by Wynn owned is now which ,
has set a table cap on the total number of casino gaming u, which is now owned by SJM Holdings (“SJM” 00880 00880 HK). (“SJM” Holdings by SJM owned is now which u, ) - . concessionholders:
The cap thatcould hold ) - .
meter and and in -
- will exp
long,three nal e total table cap was set at 5,500 through the in an open bidding process in order to tables(or
2002. . sub grant to Macau Wynn
Melco Crown Jogos (Macau) S.A. (in Sept. .
.
backthe opening of new casinos. and
and STDM
- SJMHoldings ( ‘Siamese’baccarattables
s China (01928 HK). (01928 China s meter by 1,400 tables s conc ’s nment (“Galaxy” 00027 HK). 00027 (“Galaxy” nment
- and wide,semi
WynnResorts (Macao) . sin expired ession
00880HK), Galaxy and to 7,150 tables by - - automatedFAB
concessionsto
mber that will that mber
and MelcoCrown
Page Page re grantedre
must get must ) feature )
27 further n 31 on
of of
29 .
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se Source: Figure operatorswill find ways to circumventit. supply industry paragraph)would~3,770add newtables, surpass far tablesnumberofold casinosat to make roomformore tables atnew casinos. Planned development through 2018(see next stations betting 28 feature tables e th e www.gamingfloor.biz. las - 2 : t
“Siam pag e fo - dem r ese”Baccarat Table disclaimer and
balance is healthy, is balance
aal o h of capable
bureaucrats and ig u ling ingthetable 1,400 addition However,limit.
t 6 paes simultaneously. players 60 to p will be flexible with enforcement of the cap rule. Moreover,casinorule. cap the enforcementof with flexible be will
prtr cn lo erae the decrease also can Operators we thinklongthethatasas
Page Page 28 of of 29
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015 Se www.gtja.com.hk Website: Tel.: (852 Kong. Hong Road Central, 181 Queen’s Plaza, Millennium Grand Block, Low 27/F., © 2 regulati or law applicable to contrary be and would Junan Guotai subject use or availability publication, distribution, such where jurisdiction any in di for or intended at, directed is not Report Research This unpredic inherently with decision. investment any prior to advisers own conditions financial their consult where necessary and economic and political future the of uncertainty so situation, mutable assumptions the from derived forecasts and estimates of completeness and accuracy the guarantee not Guotai Report, Research this in data contained and information the of accuracy ensure the to made been effort has best Though b made decisions investment or opinions to be contrary report this in expressed opinions Any companies. of group Junan Guotaiof executives professional other and dealers persons, s manager, in Any opinions or expressed differ this may orreport be opinions to contrary inve lead agent, placing covered the companies example, to (for relates etc. that and business do services proprietarily). may or invest investment underwriter companies banking, group investment its including and reports, Junan research Guotai Junan"). ("Guotai Limited Kong) (Hong Resear This DISCLAIMER (4) (3) (2) (1) OFINTERESTS DISCLOSURE months 18 to 6 Time Horizon: Sen Hang Kong Hong The Benchmark: Definition Rating Sector months 18 to 6 Time Horizon: Index Seng Hang Kong Hong The Benchmark: Definition Rating Company e Underpe Neutral Outperform Rating Sell Reduce Neutral Accumulate Buy Rating
01 th within the preceding 12 months. 12 preceding the within in mentioned this the with issuer Research banking and relationships itsGuotai investment not had have companies group Junan Report Research this in mentioned marke the of 1% than more or to equal hold not do companies group its and Junan Guotai (02886), Limited Limited Company Railway Limited Holdings Paper Chenming Shandong for Except ass The andtheir Analysts Report. Research this in mentioned officerissuer of the as an not serve do associates The andtheir Analysts 5 e
las Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. Rights All Limited. Kong) (Hong Securities Junan Guotai ) 2509 )
t
rform pag ch Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securit Junan Guotai by securities for subscribe or purchase acquire, to offer or invitation an constitute not does Report ch
e -
9118 Fax: (852) 2509 (852) Fax: 9118 fo r disclaimer
its group companies to any registration or licensing requirement within such jurisdiction. such within requirement or licensing any registration to companies its group
ociates do not have any financial interests in relation to the issuer mentioned in this Research Report. Research this in mentioned issuer the to in relation interests anyhave financial not do ociates
-
Definition or the fundamental outlook of the sector is unfavorable sector of the outlook or the fundamental Performance Relative or th Performance Relative is favorable sector of the outlook or the fundamental Performance Relative Definition unfavorable. is or sector company of the outlook or the fundamental < Performance Relative unfavorable. is or sector company of the outlook or the fundamental Pe Relative neutral. is or sector company of the outlook or the fundamental is Performance Relative is favorable. or sector company of the outlook or the fundamental 15%; to 5% is Performance Relative or secto company of the outlook or the fundamental Performance Relative H shares (00525), Guotai Junan International Holdings Limited (01788) and Binhai Investment Company Company Investment Binhai and (01788) Limited Holdings International Junan Guotai (00525), shares H may contain. Investors should understand and comprehend the investment objectives and its related risks, risks, related its and objectives investment the comprehend and understand should Investors contain. may
e fundamental outlook of the sector is neutral sector of the outlook e fundamental
ne g Index .
- rformance is rformance 7793
the information and data herein. This Research Report may contain some forward some contain may Report Research This herein. data and information the
< is >5%; >15%; y the asset management and investment banking groups of Guotai Junan. of Junan. Guotai groups banking and investment asset management y the - - 5%; 15%; - - - stribution to or use by, any person or entity who is a citizen or resident of or located located orof or resident a citizen is who entity or person any orby, use to stribution 5% to 5%; to 5% to 5% 5%; to 5%
- H shares (01812), China All Access (Holdings Access All China (01812), shares H - 15%;
stment strategies expressed orally or expressed writtenin by form strategies sales stment .
r is favorable. .
.
) Limited (00633), Guangshen Guangshen (00633), Limited ) t capitalization of the issuer issuer the of capitalization t
on or which would would which or on
Page Page may differ or or differ may
Junan does does Junan
table and and table - 29 ponsor, ponsor,
looking looking Report Report of of ies ies 29 in
Company Repor t Galaxy Entertainment 银河娱乐 (00027 HK) 13 March 2015