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Galaxy committed to Japan IR, willing to adjust timelines: Lui Che Woo

Galaxy Entertainment Group Chairman Lui Che Woo says the company remains fully committed to developing an integrated resort in Japan, even if the central government makes major changes to its IR timeline.

His comments, which formed a key part of GEG’s 2Q20 results announcement on Thursday, are notable given a number of major international operators have taken steps in the opposite direction in recent months – most notably Las Vegas Sands which withdrew from Japan completely in May.

Wynn Resorts also recently closed its Yokohama office while MGM Resorts – currently the sole candidate in Osaka – expressed some hesitancy for the first time during its second quarter earnings call.

Dr Lui revealed no such reservations about pursuing an opportunity in Japan.

“We continue to make progress with our international expansion plans,” he said. “We do acknowledge that timelines for Japan may be impacted by the worldwide pandemic of COVID-19, however we can adjust accordingly and we remain committed to our Japan expansion plans.”

Galaxy provided further comment in its results release, stating, “Our Japan based team continues with our Japan development efforts even as they deal with the COVID-19 crisis.

“We view Japan as a great long term growth opportunity that will complement our Macau operations and our other international expansion ambitions. GEG, together with Monte-Carlo SBM from the Principality of Monaco and our Japanese partners, look forward to bringing our brand of World Class IRs to Japan.”

Those comments are in stark contrast to the actions taken by many other players in the Japan market, including the “Big 4” in Las Vegas of which only MGM remains, albeit expressing cautious sentiments.

Caesars Entertainment Corp pulled out of Japan last August in order to focus on its US$17.3 billion merger with fellow US casino firm Eldorado Resorts, a deal that was only fully signed off on last month.

Las Vegas Sands, which was arguably the leading contender to win an IR license in one of Japan’s major metropolitan centers, announced its withdrawal in May with Chairman and CEO Sheldon Adelson stating the “framework around the development of an IR has made our goals there unreachable.”

Wynn Resorts CEO Matt Maddox revealed last week that the company had shuttered its Yokohama office back in March, adding, “We decided that until there is more clarity on what the business is going to look like, what the world is going to look like and what the regulations really are over there we’re pretty much ceasing our efforts.”

MGM remains the sole candidate in Osaka but recently-appointed President and CEO Bill Hornbuckle said in late July, “We like that we are not fully ‘all-in’ on this investment and we like the fact that there is probably going to be a delay and a reopening of some of the conversations that will hopefully make this a better investment for anyone that is interested in it, most notably us.”

Previous Chairman and CEO Jim Murren had never expressed such reservations.

Perhaps with this in mind, Galaxy made no secret of its strong balance sheet during Thursday’s results announcement, revealing HK$49.8 billion (US$6.4 billion) in cash and liquid investments and HK$43.6 billion (US$5.6 billion) of net cash.

Galaxy, long renowned for its policy of maintaining a strong cash-laden balance sheet rather than accumulating debt, remains one of only two Macau operators to have navigated the COVID-19 pandemic without seeing the need to bolster its liquidity via issuing of debt.

While most of the world’s top-tier integrated resort operators have, to a greater or lesser extent, expressed misgivings about Japan’s IR operator selection process, Galaxy’s Lui family has doubled down by expressing full-throated support and complete flexibility.

It is this kind of “long game” thinking and deep understanding of Asian markets and Asian governments that has seen the Lui family come out on top time and time again over many decades, and in particular seen Galaxy Entertainment Group’s meteoric rise from rank newcomer to a tier 1 global IR industry leader in just 16 years.

Undoubtedly there are plenty more twists and turns to be played out in Japan over the months and years ahead, but nobody can deny that Galaxy, with their Asian sensibilities, balance sheet billions, reconfirmed flexible attitude, and commitment to the process, is a very serious contender indeed.

They may well be playing smartest of all the candidates in the Japan IR beauty contest, and over the past few months have arguably ascended to pole position.

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