Galaxsys’ Final Destination for the Year: SiGMA Europe

The Rank Group has reported a 6 percent year-on-year increase in its total net gaming revenue (NGR), reaching £182.3 million in the third quarter of its 2023/24 financial year. This growth has been attributed to the performance of various business segments within the company.

The Grosvenor casino venues, the largest contributing segment, generated £80 million of the total revenue, marking a 3 percent year-on-year improvement1. This growth was facilitated by a 5 percent increase in visitor numbers and a 2 percent rise in average weekly NGR. The digital segment of , delivering an additional £55 million, up 6 percent on a like-for-like basis.

Meanwhile, the Mecca bingo venues outpaced other segments, with revenue improving 12 percent year-on-year to £37.3 million. This was driven by a 5 percent increase in customer visits and a 7 percent increase in the average spend per visit. In Spain, the operator’s Enracha venues contributed a further £10 million in NGR, reflecting a year-on-year growth of 9 percent. These figures culminated in the group’s total NGR for the first nine months of its 2023/24 financial year reaching £544.9 million, up 8 percent. John O’Reilly, the CEO of Rank Group, expressed satisfaction with the company’s progress across both venue and online businesses. He highlighted that the Q3 trading was very much in line with the board’s expectations. O’Reilly also mentioned the upcoming land-based reforms from the government’s white paper, which the company looks forward to implementing in the coming months. In other developments, the Rank Group has entered into an agreement to sell its holding in Passion Gaming, an Indian online rummy business. The sale, which is for a nominal consideration, is expected to complete in the coming weeks.

Following the publication of these results, investment bank Peel Hunt reiterated its Buy rating for stock and set a target price of £112. It’s worth noting that after peaking at more than £3 in February 2020, shares in Rank Group have been on a downward trajectory, dipping as low as 56p in October 2022. Over the past month, shares have been traded between 66p and 73p,

As of the latest update, The Rank Group Plc (RNK.L) is trading at GBp71.00

has revised its rating for the Galaxy Entertainment Group (GEG) from ‘Overweight’ to ‘Even-weight’. This unexpected shift was primarily due to the unfulfilled anticipation of an increase in mass market share following the grand inauguration of Galaxy Macau Phase 3.

Analysts Praveen Choudhary and Gareth Leung highlighted that their projections for GEG’s expected EBITDA for 2024 and 2025 are now 13 percent lower than the market consensus. The consensus had previously predicted a surge in mass market share as a direct consequence of the Phase 3 launch, however, these expectations did not come to fruition.

The market consensus had also forecasted Galaxy’s 2024 mass market share to be at 20 percent, which is 170bps higher than the 18.5 percent it managed to achieve in the latter half of 2023. Contrary to these projections, Morgan Stanley anticipates that GEG’s mass market share in the first quarter of 2024 will further decrease to 17.7 percent. This downward trend is attributed to the potential operating deleverage as the company escalates operating expenses in an attempt to capture market share and for non-gaming investment. Despite this setback in market share, compared to its Macau counterparts. It trades at a premium of 12 percent over Sands China and 20 percent over the rest. This premium is presumably due to GEG’s net cash position and the market’s optimism about growth from Phase 3 and the forthcoming Phase 4 development.

While Morgan Stanley predicts that GEG’s EBITDA growth will lag behind its peers in the first quarter of 2024, they also indicated that their outlook might turn more positive if they observe a more noticeable trend of market share gains from the second half of 2024 onwards.

Galaxy has a commendable track record in managing and escalating operations. Some investors are drawn to its net cash position amidst an uncertain China macro. However, considering these recent developments, Morgan Stanley has reduced its Target Price on GEG shares by 17 percent to HK$381.

The downgrade by Morgan Stanley has the potential to shake the very confidence of investors in GEG. The perception of underlying issues within the company could lead to a possible sell-off of shares, as investors might view this as a sign of increased risk.

This downgrade often leads to a decline in the company’s stock price. The perceived increased risk could prompt investors to sell their shares, driving down the share price. This, in turn, could result in increased scrutiny from investors and market analysts. The pressure to improve performance could mount on GEG, forcing it to take corrective measures.

The reputation of GEG might take a hit due to the downgrade. It could affect the company’s standing among its peers and could influence future business dealings. If GEG plans to raise capital in the future, this downgrade could impact those plans. Lenders and investors might view GEG as a higher risk, potentially leading to higher borrowing costs or difficulty in attracting investment.

The downgrade might also force GEG to reassess its operational strategies. This is particularly true for its efforts to increase its mass market share and non-gaming investments. This could lead to changes in the company’s operations and business strategy. Despite these challenges, GEG’s response to this situation will be crucial in determining its future trajectory.

In Indonesia, a nation where gambling is forbidden for both local and international players, preparations are underway to escalate the battle against online gambling. The Indonesian Minister of Communication and Information, Budi Arie Setiadi, has unveiled plans to create a unified task force dedicated to eliminating online gambling. This declaration is part of a series of initiatives in recent years to suppress gambling in the country.

Within a span of six months, Setiadi has supervised the blocking of nearly a million gambling activities in the country. This new task force signifies a substantial advancement in the country’s ongoing war against unlawful online gambling.

The task force’s objective is to address the issue of illegal online gambling by promoting tighter collaboration among ministries and institutions. The Ministry of Communication and Information will be tasked with eliminating online gambling sites, while the enforcement will be undertaken by relevant institutions and law enforcement officials.

Setiadi expressed, "This week we will finalize the steps to establish an integrated task force aimed at eliminating online gambling. This form of gambling is illegal by law, hence, the need for effective enforcement measures. The Ministry of Communication and Information will concentrate on withdrawing and removing online gambling sites, while the enforcement aspect will be delegated to law enforcement officials”.

Absolutely all forms of gambling, whether practiced by locals or foreigners, are strictly prohibited in accordance with the country's Islamic principles and Sharia law. The government has implemented rigorous laws and regulations to uphold this prohibition. The only exception is licensed free lotteries, but there are also known as interactive gambling. Despite efforts to block access to interactive gambling sites, these restrictions are frequently bypassed. Despite the apparent interest in gambling, the legal landscape in Indonesia clearly prohibits such activities, with severe legal consequences and penalties for those who engage in them, regardless of age. Therefore, apart from licensed free lotteries, there are no legal avenues for gambling in Indonesia.

In other legal and regulatory developments, the Australian Communications and Media Authority (ACMA) has reported its actions against illegal gambling during the The investigation revealed that a total of 18 offshore services were operating in violation of the Interactive Gambling Act 2001.

This worldwide effort against illegal gambling highlights the gravity of the issue and the necessity for coordinated international action. As nations like Indonesia and Australia persist in their crackdown on illegal online gambling, it is evident that this issue continues to pose a significant challenge for regulators globally. The establishment of the integrated task force in Indonesia marks a significant progression in the country’s ongoing endeavours to combat illegal online gambling. As the struggle against online gambling escalates, it will be intriguing to observe how these efforts develop and the impact they will have on the online gambling landscape in Indonesia and beyond.

Helena de Senna Fernandes, Head of the Macao Government Tourism Office (MGTO), predicts a significant increase in inbound tourists to during the upcoming Labour Day holiday. Projections indicate an average of 130,000 visitors per day, surpassing previous holiday peaks observed during Cheng Ming and Easter. 

Fernandes highlights the extended duration of this year's Labour Day holiday in mainland China, spanning five days from May 1 to May 5. This prolonged holiday period is anticipated to attract a larger influx of mainland tourists to Macau, contributing to the city's tourism resurgence. 

With Chief Executive Ho Iat Seng's announcement of forthcoming between Macau and Hengqin for mainland tour groups, Fernandes expresses industry anticipation for these measures. The implementation of such initiatives is expected to revitalize mainland tour groups, fostering increased business opportunities for Macau's tour guides and travel agencies. 

Fernandes highlights the readiness of many Macau tour guides, who have acquired qualifications to operate in Hengqin during the pandemic through training and learning initiatives. She anticipates that the new multi-entry visa scheme will enable Macau tour guides to expand their professional scope, facilitating work opportunities between Macau and Hengqin.  

Despite challenges posed by the pandemic, Fernandes remains optimistic about Macau's international tourism prospects. With a goal of welcoming 2 million international tourists throughout the year, Fernandes expresses confidence in surpassing this target based on promising data from the first quarter of the year. 

Last month, Macau’s Statistics and Census Service said that visitors from South Korea and Thailand top the list of its . The list also includes visitors from Mainland China. 

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