Good day, and welcome to today's Galaxy Entertainment Group Third Quarter Results 2022 Investor Conference Call. This conference is being recorded. At this time, I'd like to hand the call over to Bob Drake. Please go ahead, sir. Greetings, everyone, and thank you for joining us for the update call on GEG's Q3 2022 Results. The GEG team joining me here on today's call include Mike Mecca, a member of the GEG Board of Directors, Roland To, Senior Director of Strategic Planning, and Peter Caveny, Assistant Senior Vice President of Investor Relations. Copies of our media release, stock exchange announcement, and PowerPoint presentation are available on our website, which also include our customary disclaimers. On behalf of the entire GEG family, we greatly appreciate everyone's continued tenacity in battling the enduring COVID-19 pandemic, as well as the aftermath that continues to leave its mark on the global economy. We remain confident that the world, including Greater China, will continue to successfully navigate through this traumatic period, where we remain upbeat and positive about a much brighter future. As you know, sporadic COVID-19 outbreaks have continued throughout 2022, where the Macau government continued to react incredibly swiftly to minimize public health and safety risks as they have throughout the entire crisis. We again applaud the Macau government for its proactive, decisive, and effective leadership during the pandemic, including, most recently, the local outbreak in Macau in late October. Despite these sporadic outbreaks over the past 2+ years, Macau has demonstrated an ability to bounce back quickly in a choppy market while at the same time supporting the all-important public policies, which is certainly cause for optimism. Unfortunately, the sporadic outbreaks in Greater China have resulted in very low visitation and very low revenue, which has significantly elevated financial pressure on profitability, balance sheets, and liquidity. As we have mentioned many times before, we continue to believe that the Macau market recovery will be gradual, managed, and choppy in the near term, where we remain as confident as ever in the medium and longer term future. To be clear, GEG remains as committed as ever to the health and safety of the community, our team members, and our guests, as well as the economic and social stability of Macau, including during the recent outbreak, where the continued containment of the virus remained the highest priority. Another prime example of our long-term confidence in Macau happened this past September 14th when we submitted our tender for the new Macau gaming concession, where we are well-positioned to support the long-term development of Macau and its vision of becoming a world center of tourism and leisure. Let's move on to our Q3 2022 performance, where our effective cost control efforts continue to yield positive results as we navigate through a very choppy and challenging revenue environment where we can basically only control what we can control. GEG reported a Q3 2022 EBITDA loss of HKD 580 million versus Q3 2021's positive HKD 503 million and Q2 2022's loss of HKD 384 million. Our normalized EBITDA loss in Q3 2022 was HKD 561 million, where we played unlucky, which reduced EBITDA by HKD 20 million. We invite you to refer to the table in our press release at your leisure for additional details. We also continue to work hard at managing our cost structure. To that end, our Macau OpEx burn rate has declined by 40% from approximately $3.4 million per day under normal operating conditions with $2.1 million range in Q3, which also represents a 4% sequential reduction, which unfortunately benefited from the casino closure in July. The real test, as we've said many times before, is converting as much of these temporary savings to permanent ones, where we are confident that we will create sustainable operating leverage as business gradually improves. We would like to pause here, as we usually do, and make a very important point on fiscal management, especially during these challenging times, that distinguishes Galaxy from the rest of the Macau market and, for that matter, the global industry. We certainly acknowledge that OpEx burn rate is an important part of the expense equation, but there's certainly more to the overall cost structure than that. Daily cash burn is more indicative of the cost structure as it includes interest expense. Hello, Bob? I'm afraid we lost Bob. One moment please until we reconnect his line. Okay. Unfortunately, it's not possible at this time to redial Bob. Bob, you may continue. Thank you. Apologies for the technical challenges on our end here. Let me resume our opening remarks. We were talking about our OpEx burn rate, and I just want to go on that we've also contributed HKD millions to the COVID-19 relief efforts to support the community as we have previously reported. We also invite you to review some of our recent awards, including for our CSR efforts, among others, noted in our press release. Let's move on to our development update, beginning in Cotai, where we continue to invest in Macau as well as Galaxy's future. We are pleased to report that we have virtually completed the construction of our Cotai Phase 3, including Raffles and Galaxy Macau, as well as the Galaxy International Convention Center and Andaz Macau. As we have previously reported, we intend to align the opening of Cotai Phase 3 with the recovery of the Macau market. We're also proceeding with the construction of Cotai Phase 4, Macau's only next generation integrated resort, which will complete our ecosystem here in Cotai. As you can see, we remain highly confident about the future of Macau as we continue to invest literally billions of dollars into our business. In fact, we invested approximately $900 million in Cotai Phases 3 and 4 during Q3 and a little over $23 billion to date against our $50 billion project, where we are doubling our footprint in Cotai. Our Cotai development activities, along with our existing property initiatives, also demonstrate our support of Macau during the pandemic by continuing to invest in the economy, providing jobs and supporting local SMEs during these challenging times, as well as our long-term commitment to help Macau achieve its vision of becoming a world center of tourism and leisure. Let's move on to our balance sheet, which continues to remain strong, liquid and virtually unlevered. Cash and liquid investments decreased from HKD 29 billion at the end of June 2022 to HKD 22.5 billion at the end of September. Our net cash position declined from HKD 20.3 billion - HKD 19.3 billion as investing in our co-development projects, including Cotai Phases 3 and 4, and funding operating losses was partially offset by net interest income. Total debt decreased from HKD 8.7 billion - HKD 3.2 billion, which primarily reflects HKD 2.9 billion of borrowings associated with our treasury yield enhancement initiative. Our core debt remained minimal and declined slightly to approximately HKD 325 million, which includes zero debt associated with our Macau operations. Yes, to be clear, we said zero debt with our Macau operations. Our next topic is our outlook, where we continue to remain optimistic that Macau's recovery will be gradual, managed and choppy, and are very confident that Macau will continue to navigate through the pandemic. We are also encouraged that we see strong signs of healthy demand, and we are very confident that the leisure and tourism sector will gradually bounce back. This, of course, includes China's recent reinstatement of the eIVS program, which will be followed by package tours to Macau in the near future, which are certainly positive signals indeed. In the interim, we'll continue to control what we can control as we remain well capitalized to invest in our development initiatives, including our game changing Cotai Phases 3 and 4, and navigate through the pandemic operationally. We also remain upbeat and very positive about the long-term prospects for Macau, where the underlying fundamentals continue to remain incredibly compelling. In closing, we would also like to extend our sincere appreciation to the Macau government for their admirable performance, as well as the community which has rallied under their leadership during the pandemic. We would also like to thank all the GEG team members again, who have been extraordinarily supportive of the community and the company during this challenging period. Operator, that concludes our opening remarks, so I'm happy to turn it back over to you for the Q&A session. Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you wish to cancel your request, please press star two. Again, it is star one to ask a question. Now the first question comes from Billy Ng from Bank of America. Please go ahead. Hey, Billy. Hi. Hey, Bob, Peter, good afternoon, and thanks for taking my question. I have two quick questions. One is, have you noticed about more inquiries, more potential demand since the reopening of the electronic [visa]? I know, like, there's still a lot of cases in Guangdong Province, so, like, maybe it would take a little bit more time. Any color will be appreciated. Thanks. Sure. Billy, as you know, we, as we continue to say, we've been saying for quite a long time that we believe that the recovery will be gradual and choppy. Certainly, the news about the gradual reinstatement of the [e-Visas] and then the forthcoming opening of package tour visitation in Macau are certainly very positive signals. It's a little early. It's gonna take some time for it to ramp up as you kind of remarked in your question. We view that as a positive development. It'll take time to implement, and it's just another positive signal that we're moving in the right direction, albeit gradually. You know, one of the comforting factors is that we know that Macau can bounce back rather quickly. If you look at the break-even points, where we need to be about 30% of what we did in 2019 ex-VIP, to break even, and then the market could also bounce back very quickly. We have to be patient. Thanks. Yeah. My second question is just wonder based on your presentation or PowerPoint, it looks like Phase 4 is progressing very well. Just wonder, are there any specific non-gaming element that maybe from Phase 3 or Phase 4 that you think that could help Macau government to attract foreign customers and also satisfy their diversification and non-gaming requirements down the line? Yeah. Great question. You know, we're very excited about Phase 3 and Phase 4, which actually doubles our footprint here in Cotai. Of course, Phase 4 completes our ecosystem, as we said in our opening remarks. We're very fortunate it'll be the only next generation integrated resort in Macau. What we're doing is taking all the changes in consumer behavior over the years and incorporating that into our design, which we believe will help, you know, support Macau's overall economy, visitation to Macau, and through innovative developments that will be well-positioned for future success. It's. We're very excited about that. Again, we're trying to be a good partner here with the Macau government, help them achieve our objectives, provide an outstanding customer experience for our guests to come back over and over again. All right. Thanks. Hey, Bob, thanks a lot for all your help. Thanks. Thanks, Billy. Thank you. As a reminder, it is star one to ask a question at this time. We'll pause for just a moment to allow you to signal. There are currently no further questions in the queue. As a final reminder to ask a question, please signal by pressing star one. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. We have a question from George Choi from Citi. Please go ahead. Hey, Bob, thank you for taking my question. I know you Hey, George. You talked about. Hey, Bob. Phase 3 opening, I know you say you align it to market condition and other factors, but perhaps if you can give us some more specific concrete guidance. I remember last time you were saying that, all you need is like 90 days to get it ready to open. Is that still the guidance? It's when you look at what we're doing with Phase 3, particularly with Raffles at Galaxy Macau, it's not a new integrated resort where you may obviously require more time to open the doors. By virtue of being another, essentially another hotel at Galaxy Macau, we can ramp it up very quickly. The same, although the convention center and the arena in Andaz is a separate property right across the street, it's one where the hotel wouldn't take long to ramp up. With the variable nature of our MICE business and the arena and programming the arena and the labor, more importantly, associated with operating that, is more variable and albeit casual, if you will. That it doesn't take as much time to get the staff up and do some simulations and the like there. We're sticking to our 90 days to open once we see that there's strong evidence that the market's going to recover. Again, we wanna see strong evidence that the market is going to recover. Even though it doesn't take a lot of time to ramp this up, we don't want to incur incremental OpEx that is just going to dilute our returns. We just see strong evidence that the market's going to recover. We'll just continue to align the opening to Phase 3 with the recovery of the overall market. Thank you very much. Another question from me if I may. I know it's already one month ago, but do you see any positive data points from the Golden Week? Yeah. The Golden Week was, you know, you know, there's always a silver lining here that although it, we wish it would have been a much stronger Golden Week, and, you know, as we said, it's going to be a gradual and choppy recovery. One of the highlights for us during Golden Week is that, again, the silver lining here throughout this pandemic has been the performance of our retail business. We actually reported record tenant sales during the Golden Week of October. It's not Chinese New Year, and it's not per se, but it's still a strong signal that demand is, it remains very strong. We'll take that as a positive signal that, you know, when the market recovers, there's just strong demand out there across all segments, but retail has been particularly strong for us. That's encouraging. One final housekeeping question, if I may. Bob, you got cut off earlier. I heard you saying daily OpEx, it's about HKD 2.1 million per day, and that is 4% sequential decline. What was the cash burn? Our cash burn is what we do, George, is you take we're very fortunate that we generate net interest income rather than interest expense. If you take the $200,000 a day that we're making in Q3 and deduct that from the $2.1, it gives you a burn rate of about $1.9 before investing in any capital expenditures. We're very conscious of not only controlling our costs, but not taking on any incremental cost, OpEx, if you will, before there's a strong evidence of a recovery. We're just trying to be disciplined operators and a lot of the management team here has been through multiple downturns. We're just applying all the lessons learned to the current situation. Not only that, we're quite confident that we'll emerge a much more effi- I'm afraid we lost Bob again. One moment. I'll try to reconnect Bob's line. One moment, please. Trying now. Ladies and gentlemen, you will hear music until we get Bob's line back into the conference. Please stand by. Please continue, Bob. Apologies for the technical challenges. George, I didn't mean to get cut off there, but I'm not sure what you heard or what you didn't hear. No. You commented the HKD 200,000 interest income already. I guess that's all we need. Yeah. Of course, we believe that this will translate and will convert as many of these temporary savings into permanent ones. We believe that's gonna turn into operating leverage to the tune of 1%-2% on margin, ex any shift in revenue mix. Again, we have a management team that's been through multiple downturns. We're just very disciplined operators, at least we hope we are. We'll continue to apply the lessons learned and emerge a more efficient operator when we come out of the pandemic. Thank you very much. That's a very good comment. Thank you. Simon Cheung from Goldman Sachs, please go ahead with your question. Hello? Can you hear me? Hi, Simon. How are you? I hope you don't get cut off. I'll ask quickly. You know, I have a couple questions. Just you mentioned that, the breakeven is about 30% of the 2019 mass market GGR. Can I try to understand, you know, on that assumptions, what are you assuming for non-gaming? Is that a cash flow breakeven or is that a EBITDA breakeven? If so, I also heard that you mentioned HKD 1.9 million being the burn rates. What if you include the, let's say, maintenance CapEx as well? If you can give us some guidance on that's I think the first one. I've one or two more follow up. Let's see. I'm sorry, can you just repeat that? I just wanna make sure I heard them correctly. It's breaking up. Several things. One is you mentioned that the breakeven level would be when you have mass market come back to about 30% of the 2019. One is that cash burn cash breakeven, or is that an EBITDA breakeven? That's one. What is your assumptions in this for non-gaming? Is that also same thing for 30%? You mentioned that, you know, the cash burn is about HKD 1.9 million inclusive of, you know, HKD 2.1 million OpEx and a positive, you know, HKD 200,000 on the net interest income. I wonder whether there's any so-called maintenance CapEx which we should take into consideration. If so, you know, any number you can share with us. As far as breakeven is concerned, it's more of what we used to say was. It was in the low 20s, including VIP. Of course, we don't believe that VIP is gonna come back like it did in 2019. If it does, if ever, will take a long time to get there. If you adjust for the absence of VIP, the breakeven for an EBITDA number is about 30%. It's, you know. What we're trying to do with OpEx is really disclose to you or just, you know, to explain to you guys what it is on stuff that we can control. CapEx can always be controlled, right? You can either turn that on, turn it off, delay things and the like there. Now what we can tell you, I'll give you some guidance on, you know, kind of pivoting here onto our spend for Phase 3 and Phase 4. Because what we're trying to do is really we're investing in the future in Phase 2 and Phase 4, and the majority of our capital expenditures is allocated to that number. We spent about HKD 900 million, or I should say, invested about HKD 900 million in Q3, for a total, we took a little over HKD 23 billion, as we said. Give you some forward guidance here, which we haven't had in the past. If you look for the balance of 2022 and all of 2023, I would say that we invest around HKD 8 billion primarily in Phase 4, to be honest with you, given that Phase 3 and phase is virtually completed. That's helpful. The second question is on the table. Understandably, you know, government set the target 6,000 tables in the foreseeable future. I understand, you know, Galaxy obviously have some spare tables. Can you share with us, you know, where are the sources of spare tables? Obviously the question is, you know, in the longer run, how should we think about, you know, when you have all these projects kinda up and running, obviously you need more tables. How should we think about it? Apologies, I'm afraid that we lost Bob again. One moment please, until we reconnect Bob's line. Back again. Apologies. Simon, I hope I- Sorry. I hope you got some of that. I missed. I was trying to ask about tables that the government have set a cap at 6,000. Given you have Phase 3/4 and maybe some other projects on the pipeline, where are the sorts of tables? If you can share with us, you know, spare table capacity at your existing property and maybe where are those tables? Well, as you know, with the 6,000 tables that the government's come out with, you know, we're just a long way from being at a capacity or a decent capacity utilization rate. It's gonna take some time to get there. We continue to be comfortable with our current table allocation, and we'll be working with the government as we move forward here. You do know that they're implementing a minimum revenue target per table, which I think overall we feel comfortable with, especially if you look back at the first quarter. They also did introduce the concept of flexibility should the market conditions persist and around these minimum targets. We'll just continue to work along here, but we're a long way from being capacity constrained from tables. Okay, understood. My last question is just on dividends. You know, last time you paid, I think HKD 0.30. I'm trying to understand what's the dividend policy now. Our dividend policy hasn't changed. We evaluate, you know, dividends on a case-by-case basis. We always review our capital allocation strategy with our board. Right now we think that, given the prevailing market conditions that it's we'll continue to invest in our capital allocation strategy will be based on investing in Cotai Phase 3 and 4. We'll evaluate dividends in the normal course of business and on a case-by-case basis. Nothing's changed. Okay. Okay, understood. Thanks a lot, Bob. Thank you. Thank you. Our next question comes from Terry Ng from Daiwa Capital Markets, Hong Kong. Hi, Bob. Hey, how are you? Yeah, I'm good, I'm good. Actually I wanted to ask about Golden Week again. Actually the official statistics from the government has mentioned that the occupancy rate and visitation were actually relatively strong, and it's actually in between the May 2021 Golden Week, the Labor Day Golden Week, as well as the October 2020 Golden Week. It seems that it hasn't really translated into a strong GGR for the month. You mentioned that the retail was strong. Have you noticed any changes in the consumer spending habits or motivation during this Golden Week, pivoting towards more non-gaming rather than gaming? Do you think this is like more of a temporary phenomenon? Well, I think what it does is really signal that there's just strong latent demand for Macau and what we offer here. You know, it's the gaming market is the gaming market, and you see the numbers. It's as we've always said, it's gonna be a gradual and choppy recovery. You know, we had a challenging weekend last weekend, but hopefully, you know, occupancy will pick up. But at the same time, you know, there are outbreaks in Guangzhou. We just have to really focus on what we can control, which is basically our cost structure. We take these silver linings, like the strength of our retail business as positive signals. Of course, on the back of that, you do see relaxation of policy, particularly around, like, you know, the eIVS, as well as the forthcoming package tour resumption. It's, they're all positive signals, and you just have to be patient. You know, our primary focus has always been the public health and safety, and we're quite confident that we can navigate through this very tumultuous storm, and we're very fortunate to be well capitalized to weather through the storm. We're really excited about the long-term prospects for Macau. We'll get through this. All right. Thanks so much. Our next question comes from Andrew Lee from Jefferies. Please go ahead. Hello? Andrew. Hi. Please go ahead, Andrew. We can hear you. Yep. Hi. Can you give me a little bit of guidance in terms of the City Club going forward, right? Because obviously, two casinos ceased operations. You have Waldo Casino left. Could you just give us a little bit of guidance going forward in terms of what's the plans and how should we look at the, like, the contribution in terms of EBITDA? Sure. As you know, we closed the President Casino in the second quarter, and we totally exited it. Those deals are closed. As far as Waldo is concerned, we're currently talking to Waldo about what the plans are around their continuing operations there, and we'll update you as we move forward. As you know, City Club has been, you know, an important opportunity for the company. If you look at the history, the opportunity for the company to learn the market and certainly we apply the knowledge from our City Club into StarWorld and apply that into Galaxy Macau. As you know, we're very disciplined. We always walk before we run, but it's a, you know, City Club was a relatively small contributor to the group, an important one nonetheless. We'll continue to work with the Waldo folks and see where we. That's an ongoing conversation, and we'll update you on next quarter. Okay. My final question is, your cost came down 4%, like you mentioned earlier, right? In terms of OpEx. Will that trend continue into next quarter, or is that as much savings as you can get going forward? Well, you know, we're constantly looking at our cost structure and looking at things like not only labor. We've had some flexibility with our labor force, and everyone's been contributing. Looking into the suppliers, you know, from a supplier standpoint, things like maintenance contracts. We're turning over every stone that we can, and we're quite confident that we can convert some of these temporary savings into permanent. You know, we've been at this for the last couple of years. We'll keep trying, but I think the number in Q3 may have been a little artificially low for not good reasons. It was a casino closure in the month of July for 12 days. You know, actually, when the market starts bouncing back, we want our OpEx to increase because that's variable cost and, you know, we will only want to incur that incremental OpEx when we see the market recovering. It's accretive to the bottom line. We're doing as much as we can on a cost control standpoint, but at the same time, you know, we still have customers visiting the property. We don't wanna compromise our service standards, and we certainly haven't. It's a combination of those two things and ultimately translates into a sustainable operating leverage once we emerge from the pandemic. Okay, that's great. Thank you. Thank you very much for answering the questions. Now last question in the queue is from Richard Bruce from Trinity Street Asset Management. Please go ahead. Bob, good afternoon. Yeah. Just a question on the need to be promotional once the market reopens. I mean, I think it's clear that at some stage, people will be able to come back to Macau in volumes. What do you expect in terms of how much promotion you will need to get people back? Or do you think it's a situation whereby once you open, the demand will be very strong and therefore the yields will be very high? In other words, once we get through this period of uncertainty, should we get actually very high yields per visitor? That's my first question. Sure. We believe that the recovery will be led by the mass business. You can see that the customer preferences have evolved and changed over time, have definitely become more sophisticated. It's very important that we offer this truly integrated experience, not about gaming, but certainly more about, you know, the hotel experience from the Broadway to the Ritz-Carlton and, you know, all the leisure experiences, food and beverage, retail, as we talked about before I got cut off there a couple times. Just a holistic integrated resort offering. Now as far as promotion is concerned, we don't want anyone to forget about Macau here, so we're working with the MGTO, which is the Macau Government Tourism Office, and doing these roadshows in China just to make sure that our brand is out there, and trying to attract people to come here. You know, when we look at the performance of our retail business and the proximity of our customers, we don't need, like, millions and millions of customers to come in every day. We just need a few to get started and get the ball rolling again. As you can see, the visitation stats are directly correlated with our revenue and the like there. With the mass revenue and the promotional activity associated with that, where it's by definition a much higher margin business. Once the group travel starts up again and we start getting some more foot traffic through here, we're quite confident that we can at least from a margin standpoint, by virtue of the revenue mix shift, generate higher margins, and we're sure the absolute dollars will follow at some point. Okay, great. Just sorry, a second question. I missed. Yeah, sure. A part of the earlier part of the call. Was there any update on the license renewals? Sure. As you know, it's one of the highly publicized topics here in Macau is the Macau tendering process for the new gaming concessions. There are currently no further questions in the queue. With this, I'd like to hand the call back over to Bob for any additional closing remarks. Operator, I think Bob fell out again. Yes. The line is gone. Indeed. That's yes. It's indeed Bob. We lost Bob again. Look, if there's no more questions. Thank you very much for the time. I appreciate it very much. I do apologize there were some technical issues there, and we look forward to updating you in the new year as well. Thank you and have a good evening. Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.