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UPDATE 1-Macau casino firm Galaxy's Q3 profit jumps on non-gaming strength
October 26, 2016 / 7:20 AM / in a year

UPDATE 1-Macau casino firm Galaxy's Q3 profit jumps on non-gaming strength

* Q3 net profit up 28 pct, at highest since Q3 of 2014

* Stock jumps as much as 3.8 pct to highest in 14 months (Add details of results)

HONG KONG, Oct 26 (Reuters) - Macau casino operator Galaxy Entertainment Group posted a 28 percent jump in third-quarter net profit, as newer, family-friendly projects helped draw in visitors to the Chinese territory.

Galaxy’s results on Wednesday portend well for its rivals such as Sands China and Wynn Macau who have also launched projects designed to appeal more to non-gamers in the world’s biggest gambling hub after overall growth plummeted in the past two years.

Galaxy and the five other listed casino operators in Macau have been hit by sagging demand from high roller Chinese gamblers due to a crackdown on corruption and slowing economic growth in the mainland.

“We are encouraged by the continuing signs of market stabilization, yet it remains too early to call the bottom of market,” the company said in a securities filing. “We would like some more time before calling it a definitive trend.”

The company reported a profit of HK$2.7 billion ($348.13 million) for the quarter ended in September, its highest in two years. Revenue rose 5 percent to HK$12.9 billion.

Galaxy’s shares jumped as much as 3.8 percent in afternoon trade to HK$32.65, the highest since Aug. 18, 2015. That compared to a 0.9 percent fall in the benchmark index.

The former Portuguese colony, now a special administrative region belonging to China, is the only place in the country where citizens are legally allowed to gamble.

Non-gaming has emerged as a bigger priority for the operators in Macau as gaming revenues have declined, with authorities aiming to wean the southern Chinese territory away from the casino industry towards more family friendly activities.

“The Macau market is clearly transitioning to a mass market focused environment,” Galaxy said, adding that a growing middle class in China is seeking a more holistic tourism and travel experience. Galaxy opened its Broadway casino and resort extension in May last year.

Recent multi-billion dollar casino openings by Sands China and Wynn Macau are also slowly helping a recovery in the VIP customer segment where visitor numbers had dwindled since the start of 2014 when the government began a campaign against a display of wealth by public officials.

Galaxy, owned by Hong Kong tycoon Lui Che Woo, has the biggest land plot on Macau’s Las Vegas style Cotai strip where the $4 billion Wynn Palace and $3 billion Parisian property opened in the third quarter.

Galaxy still has around half of its land area to build out on Cotai and has said it will expand non-gaming facilities in the neighbouring island of Hengqin.

$1 = 7.7557 Hong Kong dollars Reporting by Farah Master and Donny Kwok; Editing by Amrutha Gayathri and Muralikumar Anantharaman

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