Thailand plans to open two integrated resorts (IRs) in Bangkok and one each in Phuket, Chiang Mai, and Pattaya.
Galaxy Entertainment Group has expressed its intention to focus solely on a potential integrated resort (IR) project in Bangkok, even as Thailand plans to issue up to five gaming licenses nationwide, with three set for locations outside the capital.
The integrated resorts--with licenses planned to be issued by Thailand--will have two in Bangkok and one each in Phuket, Chiang Mai, and Pattaya. The duration of these licenses is 30 years, with the option to renew for a further 10 years. The anticipated 17 percent gaming tax rate is comparatively low when compared to other casino countries, with the exception of Cambodia.
The reasoning behind this move as stated by Galaxy's management was due to Bangkok being one of the most popular tourism destinations in the world, which would give itself "more certainty on its investment return." Galaxy is aiming for up to $300 million in annual Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) due to strong tourism prospects.
Goldman Sachs revealed this information after Galaxy's Chief Financial Officer (CFO) Ted Chan and Senior Vice President of Investor Relations Peter Caveny met with investors during a roadshow in Singapore earlier this week.
"They are open to partnering with local businessmen or companies with strong connections and relationships," said the report, as quoted by Asian Gaming Brief.
Thailand's tourism sector has a lot of room to grow in the gambling sector, according to Goldman Sachs. Last year, the nation received 28 million foreign tourists, which is similar to Macau's inbound tourism.
Since most of these tourists were from ASEAN nations, the gaming industry has a strong basis for expansion.
Thailand's efforts to legalize casinos are moving along gradually. The Cabinet is anticipated to receive the draft bill for the IR initiative by the end of this year, and additional parliamentary discussion is anticipated in the first half of 2025. By the middle of Fiscal Year 2025, the government might release a Request for Proposal (RFP) if it is accepted.
Galaxy projects a possible $0.8 billion initial equity investment, with a projected $3 billion total capital expenditure (capex) for the project, which is marginally more than the minimum requirement of THB100 billion ($2.9 billion).
In accordance with the standard 50/50 equity/debt funding model, the brokerage observes that Galaxy's robust cash flow and balance sheet would support this finance, with half of the investment going to a local partner.
The casino resort may also take several years to complete, according to Goldman Sachs analysts, because of the size and complexity of such projects. Assuming a 15–25% return on invested capital (ROIC), which is a standard adopted from other regional casino projects, Galaxy expects to generate $225–300 million in EBITDA annually upon completion. Considering that FY24's estimated EBITDA is $1.5 billion, this would provide a significant boost to the company's future profits.
With a forecast of $28 billion in GGR for 2024, Macau continues to be the largest casino center in the area when compared to other Asian markets, according to the brokerage's analysis of future market development. With $5.1 billion in GGR for FY23, Singapore is the second-largest market. The Philippines comes in third with $3 billion, followed by South Korea and Malaysia with $1 billion each.
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