Financial analysts at Jefferies predict Galaxy Entertainment Group (GEG) to maintain its position as the sole Macau concessionaire paying dividends to shareholders in 2024. This expectation is based on insights gathered during discussions between Jefferies analyst Andrew Lee and GEG management at ICE London. Despite facing challenges such as market share fluctuations due to operational expansions, GEG remains optimistic about its future prospects, especially with the full impact of Galaxy Macau Phase 3 expected to boost its performance in 2024.
Dividend Forecast:
GEG’s resilience during the COVID-19 pandemic, attributed to its conservative financial policies and substantial cash reserves, underscores its ability to sustain dividend payments. Jefferies anticipates GEG to continue its dividend payouts throughout 2024, with the possibility of increasing its payout ratio gradually. Historically, GEG has maintained a dividend payout policy of around 30%, but with its robust financial position, there’s room for potential adjustments.
Financial Strength and Cash Reserves:
GEG’s prudent fiscal management enabled it to weather the pandemic without resorting to significant borrowings. Even after the launch of Galaxy Macau Phase 3, GEG boasted HK$23 billion (US$2.94 billion) in cash reserves by the end of 3Q23. This financial resilience provides a solid foundation for sustaining dividends and potentially enhancing shareholder returns.
Operational Expansion and Future Development Plans:
GEG’s strategic vision extends beyond dividend payouts, with plans for ambitious expansion projects. Following the completion of Galaxy Macau Phase 4, GEG envisions Phase 5 development, focusing primarily on the redevelopment of Broadway Macau to augment room capacity. Additionally, GEG is eyeing potential developments in prime locations such as the land between Galaxy and The Venetian bus station in Cotai, as well as opportunities in Hengqin island. Although the timeline remains uncertain, GEG expressed interest in establishing an integrated resort in Thailand, underscoring its commitment to geographic diversification and market expansion.
Galaxy Entertainment Group’s steadfast financial performance and strategic foresight position it as a frontrunner in the Macau gaming industry. Despite near-term challenges, such as transitional impacts from operational expansions, GEG remains committed to delivering value to its shareholders through dividend payments and future growth initiatives. With a strong financial foundation, prudent management practices, and ambitious expansion plans, GEG continues to chart a course for long-term success in the dynamic gaming landscape.