Thank you for holding, and welcome to the Galaxy Entertainment Group's management update for the Q2 and interim results of 2024. Joining us today are Mr. Ted Chan, Chief Financial Officer, Mr. Roland To, Senior Director of Strategic Planning, and Mr. Peter Caveny, Assistant Senior Vice President of Investor Relations. At this time, all participants' lines are in a listen-only mode. The presentation will be followed by a question-and-answer session, and instructions will be provided at that time. I would now like to pass to Mr. Chan for presentation. Mr. Chan, please go ahead. Thank you.
Thank you. Thank you, operator. Hello, everyone, and thank you for joining us for the update call on GEG's Q2 and first half 2024 results. Today, I'm joined by Peter Caveny and Roland To. Copies of our media release, stock exchange announcement, and PowerPoint presentation are available on our website, which also includes our customary disclaimers. During Q2 2024, the central government continued to support Macau's development by expanding the IVS to 59 cities, with a total population of approximately 500 million people. Moreover, the central government also relaxed visa requirements to allow multiple entries into Macau for group tour visitors from Hengqin and for people from various sectors. This makes Macau even more accessible for mainland Chinese visitors.
At Galaxy Macau, the casino floor reconfiguration was completed prior to Chinese New Year, and we have seen improvement in business and foot traffic across the floor, which helped to improve our efficiency and traffic flow tremendously. On the peninsula at StarWorld, we continue to evaluate a range of major transformation that includes upgrading our main gaming floor, enriching F&B options, and other non-gaming amenities. For Q2 2024, GEG's reported net revenue of HKD 10.9 billion, up 26% year-on-year and 3% quarter-on-quarter. Adjusted EBITDA was HKD 3.2 billion, up 28% year-on-year and 12% quarter-on-quarter. We played slightly unlucky in Q2, which decreased our adjusted EBITDA by HKD 20 million. Our balances remain robust and liquid, with a net cash of HKD 25.2 billion as of Q2 2024. We announced an interim dividend of HK$0.50 per share.
This dividend reflects our strong confidence in Macau market, GEG's future performance, and our commitment to returning capital to shareholders. In Q2, the group's mass revenue was 114% of 2019's levels, compared to 107% in Q4 last year, and 105% in Q1 this year. In Q2, Galaxy Macau's mass business performed well, achieving 134, 137% of 2019's level, while StarWorld's was approximately 75%. We continue to refine and upgrade our resorts to make them even more attractive. We focus on providing a high-quality gaming experience to attractive, to attractive, valuable customers. Our strategic initiatives aim to enhance guest satisfaction and drive long-term growth. We're glad to share the preparation to implement smart tables into our casino are well advanced.
We successfully completed live back-of-the-house pilot testing of smart tables, and in early July, we commenced the installation of smart tables in Galaxy Macau's gaming floor. We anticipate to have the full coverage of smart tables in the casino by year-end. On the development front, we continue to move forward with the fitting out of Capella at Galaxy Macau, and it is targeted to open in mid-2025, offering approximately 100 ultra-luxury sky villas and suites, which will elevate the standard of luxury hospitality in Macau and help to grow an even higher value customer. Phase Four development is progressing smoothly, and we further increase our capacity. Phase Four focus is on non-gaming, entertainment, family facilities, and also a casino. GEG is committed to capturing and expanding Asian market that seeks a more encompassing lifestyle and entertainment experience.
We're on schedule to complete Phase Four in 2027. We firmly believe in competing on quality and service, not on price. We believe that additions and upgrades to our resorts, expansion our, of our sales host team, and the introduction of smart table technology will assist us in growing and recapturing more businesses. We continue to work hard in managing our costs. Our current staff number is approximately 20,000 people, similar to the trends from 2019's level. Currently, staff costs represent around 75% of our OpEx, and we remain disciplined in cost control. In Q2, total OpEx was 2% below Q1, and the staff cost was up a marginal 1% quarter-on-quarter only.
Total CapEx for the quarter will be HKD 1.1 billion, in which we invest approximately HKD 700 million into the development of Phase Three and Four, taking our cumulative investment to date to HKD 31 billion in the combined phase three and four. We believe the many additional facilities that we have added and will continue to add in the future will build a resilient foundation for our sustainable long-term growth. Lastly, to support the Macau government's goal in expanding international visitors to Macau, we have opened overseas offices in Tokyo, Seoul and Bangkok, and we will continue a series of activities to promote Macau. That concludes my prepared remarks. Operator, please begin the Q&A session.
Thank you, sir. We'll now begin our question and answer session. If you have a question for today's speakers, please press star one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. Once again, please press star one on your telephone keypad to ask a question. Our first question comes from DS Kim from J.P. Morgan. Please go ahead.
Hi, Ted. Hi, Peter. Congrats on a strong print, and thank you so much for finally upping dividend payout and holding it regular. I think I literally for the first time in 10 years, so, congrats on that. And a few quick questions. First, how shall we think about dividend policy going forward? I mean, I guess it will be subject to the board, but shall we assume or have this 50% payout as a baseline expectation go forward? Or is it more like you look at a free cash flow and also an absolute level of dividend DPS at HKD 0.50 every half year? So, the rationale or policy explanation would be appreciated. And my second question is regarding our market share, which by the way, was fantastic in 2Q.
Can you share with us how much share we have had in July? Already industry data is out. Some third-party data suggested we may have had over 19% share, so edging up nicely again from 2Q level. But I'm wondering if you could share, you know, some of these the figures in July, and also how we should think about this uptrend in market share into second half.
Okay, great. Thank you, DS, and thank you all the questions. I think we are very excited to announce a dividend. And also, this is not a set sort of a regular dividend. We don't change our policy, but we definitely would review on a half yearly basis according to the situation. You know, if you look at our balance sheet, in the last 12 months, we generated more than HKD 11 billion in terms of EBITDA. And if we look at all the capital requirements in the last 12 months, we generate a very good free cash flow. So I think we look at the free cash flow generation opportunity, and the results as well as our net profit levels.
I think we are quite confident at this level, and we should continue to look at this level going forward. But this is not an absolute guideline. We'll review, of course, on a yearly basis. I hope that this will give our investors more confidence, which we think we're confident in ourselves, our future and Macau as well.
Taking your second question in terms of the market share, we are very happy to see that, over the last two quarters, we announced in the first quarter, late part of first quarter, that we have a couple of initiatives, including the expansion of our sales host team, making sure our ratio of sales and customers ratio are healthy, and creating a lot of stickiness of a premium mass customers, as well as adjusting our targeted reinvestment into right segment of our customer database. It looks like the initiative we put in place in the last few months are bearing fruits.
And I'm also happy to see, even though July, the market overall is a bit slow in the first 2, 3 weeks time, but the momentum is picking up in later part of July. You know, the summer holiday may be started later this time for China, and the momentum is actually getting later in July. But the momentum is getting better and better, and we are so happy to see our numbers in August actually also improve. Just to give you a little bit color on the visitation on, for instance, in Galaxy Macau, our quarter to date in Q3, our visitation actually grew roughly about 30% compared to Q2 average.
In August, our number perhaps aided by a lot of our concerts, our events, in the property in the last two weeks' time, the August visitation is actually 50% more than Q2's average, so we're quite encouraged. In terms of market share, I'd like to say that in July we are above Q2 number. We are sustained on the Q2, we are sustained to above Q2's market share, and the market share rate is actually accelerated in August to date, which is a bit early to say so in the whole month, but in the last two weeks the number is fantastic. So we see some improvement as well in August.
Thank you so much, sir, for those things. And like visitation number you shared is really impressive. And I also just upgraded the stock to overweight. I'm happy to hear that things are going even better in August. If I may follow up on one thing is, like as you earlier said, like our investment or refi money of the businesses and premium mass have bear fruits already. But if I may ask, like when you look at the investment rate based on contract revenue, it actually went up a little bit or somewhat meaningfully quarter-over-quarter. And which is fine because we gained shares and made more money.
But I, I'm just curious if you could comment on these trends into second half, i.e., shall we view this level as a new runway, or is it a start of a new trend? And, like uptrend as we gain market share, we may be a little more generous or, you know, spend a little more on the investment. And I'll, I'll go back to you after this.
Sure, sure, no problem. I think let me just clarify. I know, I know you guys don't like it, but our philosophy in reinvestment right into the customer on a monthly basis, we don't really track like this. It is really about a pocket of, you know, reinvestment dollars or amenities that has allowed our sales team to spread onto our customer according to the customer segments. In other words, I think I mentioned it last time in our earnings call, that the low to high range between the last two quarters was within 150 basis points.
I think we are disciplined in that principle, and I'm happy to say that even though we have slight increase in Q2 in general, but we are still within the 150 basis point range in terms of high and low among different months. So you appreciate that every month we have a different investment rate according to different customer, different segments, and that is the range that we have. And I'm also quite happy to see that our team, especially our sales team, are so disciplined in also managing the portfolio of the customer accordingly in the last few months, and it's helping us have an amazing result recently.
I think, in terms of the general market competition, number one, I must acknowledge that the market is always intense, you know, in the last, you know, 10, 20 years, and especially in the last few quarters. But I must also sense that the competition is actually stabilized in terms of, you know, tracing the top line. I think it comes to realization that I think every one of us believe that EBITDA and EBIT margin is also important. So, even with a higher reinvestment rate, but I think it seems that the market is stabilized in terms of competitions.
Absolutely. And congrats again. And you did have a very nice uptick in margin too, so very glad to hear. Thanks for your insight, and thank you again. I'll go back to you.
Thank you.
Thank you.
Our next question comes from Angus Chan, from UBS AG. Please go ahead.
Hey, Ted. Thanks for taking my question, and I'll add my congratulations as well, to a strong result. So, looking at you, you answered a lot of my questions. I think maybe just two for me. Firstly, great job on making the changes back in February, March, and then seeing the results in Q2. To what extent are these operational efficiency gains, you know, do you have more to come in terms of the initiatives that you planned both on the revenues basis and also, I guess, related to that, costs? Nice to see costs coming down a little bit. What's been the driver of that, and how should we think about kind of optics into the second half?
And then maybe lastly, on Thailand, Ted, what's Galaxy's interest level on Thailand? And if you can share your expectation on timing of any kind of bidding, that would be great. Thank you.
Sure, Angus. Let me go through step by step. I hope I remember all your questions. So, what's more? I guess, after a few quarters of operation in, Galaxy Arena, of course, we learn, and we learn quick. And, of course, we believe that the programs or events that we're putting in place has to be relevant. And I think in the last, particular last quarter and year to date, I think our programs in Arena are quite effective and relevant to, the right customers. So we continue that trend, and we will continue to, start to look at all these possible, programs to improve both the visitations to the property, to enhance our gaming and non-gaming, customer, attractions.
So, that will continue, and we hope—we believe that the market already transformed from the VIP to mass centric, which means if you have a large-scale entertainment offering, it will be an advantage over the one who do not have those. So, within Galaxy is the one that we have this scale operation that should be able to improve on a quarterly basis, to improve our entertainment offering. So we continue with that, that programming, and we hope that to see more on almost a weekly basis, see more events happening in the property, to go. In terms of OpEx, yeah, we are also very disciplined.
I mentioned a few times in the last few earnings call that we ramp up the operation, but at the same time, we expand our facilities. So, in the last year time, we continue to increase our headcounts. Until Q1 to Q2, we, I must say that our headcounts basically stabilize. And, you know, the staff cost represent almost 75% of total OpEx. So if this is stabilized, that which means, on a quarterly basis in the future, you will see our cost also being stabilized. So if we are able to generate more revenue, then there will be a natural EBITDA flow through. In terms of OpEx level, I think it will have to...
Credit has to given to our business unit in Macau or the operation team under the leadership of Kevin Kelley. They're doing very good job in managing manning on the quarter, so we have managed to reduce our total OpEx by 2%. So we continue that discipline, and we hope that our quarterly cost will be remain similar level with a few percent difference going forward. Lastly, on Thailand. Well, Thailand has all the characteristic for tourist destination. So I think Thailand is perhaps the most popular tourist destination in the world. And it has the natural hospitality character of the Thai people. Heard about Land of Smiles is actually from Thailand.
And they also have a well-established tourism infrastructure, and I heard that they are expecting 90% recovery to the pre-COVID level, which is about 14 million, you know, visitors to Thailand. So it's quite exciting. And also, their tourism is actually represent a quite a large portion of the GDP. I heard it's about 20% of GDP in Thailand. It looks a lot of sense that IR could be the catalyst for Thailand to generate a better in economy impact. So I think that this is the right thing to do. And the number one thing we have to see is actually the legalization of the gaming act. Currently, they're going through the public consultation in this week.
So hopefully, it will be passed to the parliament for them to discuss and pass the gaming act as quick as possible. In Galaxy here, we remain very interested, and we're actively monitoring the situation in Thailand, and hope that we have more clarity on the procedures, and we could actually evaluate the opportunity over there.
Great. Thanks. Thanks so much, Ted. I'll jump back to you.
Thank you. As a reminder to ask a question, please signal by pressing star one. Our next question comes from Simon Cheung from Goldman Sachs. Please go ahead.
Hi, Ted and Peter. Thanks for the presentation. I just got a couple questions. One is just on the often asked topics about, you know, the criminalization of the illegal exchange. You know, there's a lot of confusion in the market in terms of the scope to which is, you know, the coverage of that, and perhaps the impact. You know, we have no idea, but we would love to hear your thoughts on that. That's the first question. The second one, just looking at, you know, you obviously have a lot of net cash and cash hold, and now that you're upping your dividends.
Wondering, you know, when we look at a lot of the Chinese company, they actually do have a total capital return program, whereby they have, like, you know, share buyback and dividend as well. Is there any particular reason why you prefer one over the others, or not considering, you know, maybe a combined total return program? And then lastly, I guess it's more on the housekeeping front. On the CapEx number, do you have any figures you can share with us in the second quarter? How much you spend on the CapEx? Thank you.
Okay, Simon. Thanks for the questions. In terms of the illegal money exchanger, well, I think the bill to criminalize the illegal money exchanger will be passed perhaps in the next few months, according to the news that I heard. So I think it's a bit early to conclude the eventual impact of this, you know, criminalization bill. But in fact, there's been a national campaign to combat this sort of activity since May or June this year from the national level. And as a result, it's quite rare now to see such activities active in our casino anyway, recently. So I really want to draw the attention to the differences of the illegal gaming money exchange channels and legitimate channels.
Under the current rules and regulations, our customer from China can still spend their UnionPay card or multiple UnionPay card if you have. And also, you can carry renminbi CNY 20,000 each. If you have family members with you, you can bring more, of course. And I feel it's actually good enough for those, I would say, mid-premium mass to the base mass gaming customer in the current situations. So in our perspective, if you look at our Q3 to date number compared to Q2, our casino floor see a very high increase in table drop, especially in August. Our drop is so far 10%-15% higher than Q2 average.
That suggests that, you know, with all the activities that we put, the non-gaming activities we put, is all the gaming customer coming in, and do they have the ability to bring in cash and to expect to spend in Macau? I think there's numerous channels, a legitimate channel. That's what we see in the market and the current situation in Macau. I hope that really should actually answer to your first questions. On the return to the shareholders, I think it is really a very, very good breakthrough. This time, we look at our past history of Galaxy, dividend payout, roughly about 30%-33% in the last many years.
Besides our payout to currently 50%, of course, we'll evaluate from time to time is there any good opportunity that we could identify to returning capital or extra cash to the shareholders. That will be an ongoing process, so rest assured that the management and the board will consider when the time comes. In terms of the CapEx, I do have the number. So in Q2, we spent HKD 1.1 billion in terms of CapEx. For the whole year, I think I mentioned last time, we'll be spending probably around HKD 6 billion this year in terms of total CapEx.
Great. Thanks a lot, Ted. Thank you.
Thanks, Angus.
Thank you. There are currently no more questions in the queue.
Okay, thank you for all the questions and participation in the call. We know we are wonderful very late to report the results, but thank you for the participation. But before we go, as usual, I would like to summarize the following. So first of one, we continue to believe in Macau story over the long term. And visitor penetration rate into China is still very, very low. And the expansion of IVS, combined with the continued improvement in infrastructure, really, really enable even greater access to Macau for Chinese customers. So with Macau transforming to a mass-centric business model, those concessionaire with a large scale and development opportunity would definitely benefit the most, and Galaxy is one of those.
In the short and medium term, GG has been demonstrating its ability on the following initiative. We completed our reconfiguration of Galaxy Macau casino floor before 2022, and we continue to see improvement in the casino floor efficiency and easier for customer flow. And together with the introduction of new side bet games, our table game hold has increased and in turn has contributed to our market share gains. Our strategy to expand our sales host team has announced in Q1 and deliver increased thickness to of our premium mass customer and contribute to our recent market share gains as well. Post-Q2, after some meaningful market share gain in both GGR and EBITDA in Q2, the quarter to date, Q3, our GGR share continued to improve. And in August, we have seen a further accelerations.
Our entertainment events, especially Galaxy Arena, continue to increase visitation to the property, particular focus in gaming customer. After operating the arena for a few quarters, our program events are more aligned and targeted to the right customer and improving both our gaming and non-gaming visitation and spend. In Q3 to date, Galaxy Macau's visitation increased by 30% compared to Q2's average. August visitations sees almost 50% better than Q2's average. We don't forget StarWorld. StarWorld continues to show progress in transforming the property into a mass-centric one. During this time, we focus on improving our gaming floor and optimizing and yielding the remaining gaming tables. We actually seen the highest table drop in Q2 since the border reopened last year.
And we continue to move forward with our positioning plan. We also see record high slot revenue and handles, thanks to our innovative ETG strategy in StarWorld there. So again, transformational property will continue across this year and next year, and remain highly competent in the future of StarWorld. And lastly, on the smart table implementation, we continue to roll out in July, and we are quite confident we can complete the rollout by year-end at Galaxy Macau. And from a few weeks of available data points, we have already seen some improvement in dealer hand speed, so we're quite a firm believer in these technologies. And this concludes today's call. Thank you for your time today, and we'll see you in the next earnings call. Thank you.
This is the end of the Galaxy Entertainment Group's Conference Call. Thank you for joining us today. You may now disconnect.