he company controlled by billionaire Lui Che-woo joins Sands China and Melco Crown Entertainment in expanding on the Cotai area in Macau, the only place in China where casino gambling is legal. Casino operators including Wynn Macau, MGM China Holdings and SJM Holdings also received approvals this year to build resorts on Cotai, a piece of reclaimed land that is Asia’s equivalent of the Las Vegas Strip.
Galaxy rose 1 percent to close at us$ 3,83 in Hong Kong trading, the highest level since November 29. The city’s benchmark Hang Seng Index gained 0.6 percent. “Galaxy will continue to do well in the short run, but there may be an oversupply in the market after 2017,” said Jeremy Tan, a Hong Kong-based analyst at Kim Eng Securities. “Every casino operator in Macau is expanding in Cotai.”
Given that all projects are large-scale resorts with more than 2,000 hotel rooms each, it’s doubtful whether there will be enough demand to absorb the supply after 2017, when most of the new resorts will be completed, said the analyst, who has a buy rating on the stock and a price estimate of us$ 4,32.
Galaxy plans to fund its expansion through internal resources and debt facilities if needed, said Ku, the spokeswoman. The company has more than us$ 1.29 billion of cash on hand as well as strong cash flow from operations and doesn’t require additional financing so far, she said.
The operator plans to draw more middle-class families by dedicating about 95 percent of the area to be developed under the third phase to retail and entertainment. The expanded area will include a concert arena with about 10,000 seats, a theater with 1,800 to 2,000 seats, and one shopping mall.
The company is looking for hotel partners for Phase 3, which is expected to be completed in 2016 at the earliest and will add 4,200 rooms, Ku said.