Galaxy targets site investigation for Phase 3 & 4 by end-2014

And it's about to shell out a whopping HK$50-60m.

Galaxy Entertainment Group is focused on table yield optimization, and it involves a three-pronged approach.

According to a research note from Nomura, the optimization will be done through reducing Galaxy Macau’s mass tables count by ~30, which resulted in mass table yield up 27% yoy.

Also, by modestly reducing mass tables at Starworld, which resulted in mass table yield up 14% yoy; and lastly, closing 4 underperforming VIP rooms at Starworld (2 in Q3 and 2 in Oct) and reallocating ~20 tables to other high-performing junkets.

Here's more from Nomura:

The 2 new VIP rooms at Galaxy Macau are now expected to open in late 2014/early 2015—they had been expected to open by year-end.

Galaxy is also seeing strong junket demand for VIP rooms at Phase 2. We expect Galaxy to dominate the VIP segment given its strong junket relationships, but would not necessarily extrapolate this to the entire market.

Galaxy is fully compliant with the smoking ban, but noted it is still too early to assess the impact. There are plans to add another 4 smoking lounges at Galaxy Macau to the 4 lounges it already has.

Galaxy Phase 2 is on track for an opening by mid-2015, with retail space nearly all leased. Galaxy will hire 6,000-8,000 workers 4-5 months before opening. Grand Waldo, which will target the mass/family segment, is also on track for an early-2015 re-launch.

Finally, Galaxy expects to commence site investigation work for Phase 3&4 by year-end 2014 (budget HKD50-60mn).

The company is developing design plans to build a resort on the Hengqin land bank.