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Record stock streak enriches Galaxy Entertainment founder by US$12b
MACAU'S top casino operator is on a record winning streak as the effects of a Chinese anti-graft campaign fade - and that's enriching its owner to the tune of US$12 billion.
Galaxy Entertainment Group Ltd has jumped about 200 per cent during a seven-quarter winning streak, placing it among the top four performers on Hong Kong's Hang Seng Index. Analysts are bullish, with 24 saying buy and not a single sell rating, while their consensus target price implies a further 12 per cent gain.
That bodes well for founder Lui Che-Woo, who saw much of his wealth evaporate as China's corruption probes battered Macau's casino operators when President Xi Jinping first came to power.
Union Gaming Securities Asia Ltd's Grant Govertsen, who along with analysts at Goldman Sachs Group Inc and Macquarie Bank Ltd predicts Galaxy will soar past its all-time high, says the company's focus on mass-market gambling will continue to pay off.
"Galaxy is doing a better job operationally than any other operator today," said Mr Govertsen, an analyst with Macau-based Union Gaming who has a buy rating on the stock.
"The company came out of the downturn with a much better mass-market programme that has enabled them to become a much better all-around operator with a much more impressive future growth potential."
Mr Lui, who was Asia's second-richest person only four years ago, is now 12th in the region, according to the Bloomberg Billionaires Index. He controls the casino operator through closely-held K Wah Group, which owns stakes in Galaxy and property developer K Wah International Holdings Ltd - a stock that's up 20 per cent this year.
Galaxy has recovered some US$28 billion of its lost market value since a low in 2015. The company in February reported annual profit that beat the highest analyst estimate, and secured the biggest slice of Macau casino revenues at the end of last year.
On top of that, Galaxy agreed to buy a stake in Wynn Resorts Ltd this month, which could enable the local business to win more of Macau's US$33 billion market from US operators.
"Barring something catastrophic happening to China's economy, it is unlikely that Galaxy's earnings power faces much risk other than the occasional downturn in gaming revenue," Union Gaming's Mr Govertsen added. BLOOMBERG