Phase 2 opening is on time, meanwhile.
Galaxy reported EBITDA of HK$2.30bn for 1Q15, in line with Barclays' estimate of HK$2.27bn.
According to a research note from Barclays, EBITDA was down 40% y/y and down 14% q/q.
Barclays said it leaves its EBITDA unchanged as it make tweaks to our other estimates, and its SOTP-based price target stays at HK$44.60.
Barclays noted that it reiterates its Overweight rating on Galaxy because of its growth prospects for 2H15 and 2016, driven by the opening of Galaxy Macau Phase 2.
Here's more from Barclays:
1Q15 results broadly in line: EBITDA was at HK$2.3bn, down 40% y/y and down 14% q/q. The low hold rate negatively affected EBITDA with a loss of HK$20mn for 1Q15, including the negative impact of HK$65mn from the unfavorable hold rate in the premium direct business segment in Galaxy Macau, which offset the favourable hold impact of HK$45mn at Starworld.
Group revenue was down 32% y/y and down 15% y/y. By segment, VIP revenue was down 40% y/y and down 22% q/q. Mass table revenue performed well, down 15% y/y but up 4% q/q.
Management noted that the company has seen some stabilization in the past three to six weeks as its mass business has improved. By property, Galaxy Macau's EBITDA was at HK$1.8bn, down 35% y/y and down 11% q/q.
Starworld's EBITDA was at HK$605mn, down 44% y/y and 6% q/q. Starworld had 15% less table capacity in 1Q15 as Galaxy has moved tables to Galaxy Macau.
Galaxy Phase 2 opening remains on budget and on time: Management confirmed Galaxy Macau Phase 2 and Broadway at Galaxy Macau remain on schedule for 27 May 2015 openings.
The retail space has been fully leased. Galaxy has hired more than 6,200 new employees for the property for simulation and training.
On capex, Galaxy has invested HK$12.9bn of its HK$19.6bn budget for the Galaxy Macau Phase 2 project as of end-1Q15 and has invested about HK$1bn of its HK$1.85bn budget for Broadway.
Pre-opening expenses incurred at the properties stood at HK$430mn as of end-1Q15 of which HK$185mn was for 1Q15. We expect another HK$250-300mn of pre-opening expenses for 2Q15.
Smoking ban: Asked about the full smoking ban, management said the company is awaiting clarity from the government but said that staff feedback has been positive for its smoking lounges.
We believe casino operators will try to retain their smoking lounges, but we view a VIP smoking ban as very likely.
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