Galaxy turns to loss in 2006 after opening four casinos

It posted a loss of us$ 193 million, compared with a profit of us$ 307 million in 2005, the company said in a statement to the Hong Kong Stock Exchange yesterday. Revenue jumped to us$ 597 million from us$ 165 million.

Galaxy’s loss is mainly due to depreciation of its gaming license, opening of new casinos and high interest costs, Hillman Wong, a Hong Kong-based analyst at Morgan Stanley, said before the announcement. ”The company is operating well. After the one- time depreciation, its loss will narrow.’’

Macau’s gaming revenue surged 22 percent to us$ 6.95 billion in 2006, surpassing the Las Vegas Strip as the world’s biggest casino market. The city’s gambling revenue started to expand in 2004, when Sheldon Adelson’s Las Vegas Sands Corp. and Galaxy Casino SA ended the four-decade monopoly of billionaire Stanley Ho.

Galaxy’s loss included HK$998 million for its license amortization, total depreciation costs of HK$1.19 billion, HK$522 million in finance charges and HK$268 million in casino opening costs, the statement said.

“2006 will be our worst year in terms of losses, as we invested a lot to expand,’’ said Summy Zhu, an investor relations official at Galaxy. ”As our casinos start to operate and generate revenues, our loss will gradually narrow.’’

Galaxy, which last October opened the us$ 320 million StarWorld, said Feb. 9 that it has raised its share of the Macau gaming market to 22 percent, from 7 percent in January 2006, and is targeting a 25 percent market share this year. The 290-gaming table StarWorld was the fourth casino Galaxy opened in Macau in 2006.

Galaxy in December raised us$ 240 million selling convertible bonds and said it plans to spend about us$ 640 million to build a 1,500-room resort in Macau’s Cotai Strip. The company’s balance sheet ”does not reflect the current value of one of its most valuable assets, the significant land holding on the Cotai strip," Galaxy said today.