Galaxy Entertainment likely to suffer GGR decline in Q1 2025: Analyst
Macau-based casino operator Galaxy Entertainment Group, also known as GEG, might post a minor decline in the first quarter of 2025 as the region’s gaming and tourism sector faces minor headwinds.
According to an analysis released by Jefferies, Galaxy’s gross gaming revenue (GGR) is likely to stay at HK$10.9 billion (€1.3 billion), a one percent drop from the previous quarter. The decline comes amid ongoing challenges in Macau’s post-pandemic recovery, particularly in attracting visitors and maintaining steady daily earnings.
The industry’s average daily revenue (ADR) is predicted to increase by three percent in Q1 2025. Still, GEG is only anticipated to see a slight 1 percent increase in ADR, to MOP121 million (€14 million). The data raises concerns regarding GEG’s short-term momentum, indicating that its growth is trailing behind that of its peers.
Chinese arrivals linked to downturn
The 8 percent decline in visitor arrivals to Macau after the Chinese New Year period was a significant contributing factor to this poor performance. This time of year, also referred to as Lunar New Year, is usually a busy season for the gaming industry. However, analysts pointed out that GEG’s revenue generation has been severely impacted by a decline in travel, which has been exacerbated by a decrease in consumer sentiment in mainland China.
However, there are also a few positive aspects. Galaxy’s VIP gaming segment demonstrated resilience and is expected to provide some cushion against the overall decline in GGR. Analysts believe the strong performance in this high-stakes segment may partially offset losses in the mass market.
Despite the dip in gaming revenue, GEG’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) is forecast to reach HK$3.14 billion (€365 million), representing a 4 percent decline from the previous quarter. This reinforces the view that the company’s performance in early 2025 has fallen short of expectations.
Jefferies still optimistic about long term
Jefferies, however, is still optimistic about GEG’s long-term prospects. The firm set a target price of HK$44 (€5.10) for the stock and maintained its “Buy” rating. According to analysts Anne Ling and Jingjue Pei, the company has the potential to recover as tourism steadily stabilises and the industry recovers.
Looking ahead, Galaxy Entertainment Group’s annual general meeting is scheduled for 8 May 2025. As the business continues to prioritise governance and strategic planning in the face of a challenging market environment, the meeting will examine audited financial statements and debate over the reelection of directors.
