Galaxy Entertainment Group Ltd
HKEX:27
Earnings Call Analysis
Q4-2023 Analysis
Galaxy Entertainment Group Ltd
Galaxy Entertainment Group (GEG) is riding the wave of Macau’s tourism rebound as mainland China visitors surged to 5.7 million in Q4, contributing to an 11% quarter-on-quarter gaming revenue increase. A visitor growth forecast to 34 million by 2024 bolsters confidence in the sector's upturn. Amidst this backdrop, GEG's EBITDA rebounded from a previous loss to $2.8 billion, enriched by their prudent focus on the mass market sector, which has demonstrated robust growth reaching 107% of 2019’s levels by Q4 2023. The company’s strong liquidity, highlighted by net cash of $23.5 billion, underpins their ability to distribute generous dividends and invest significantly in expansions, cementing their optimism for sustained growth and market leadership.
GEG's distribution of special dividends, including the recent announcement of a $0.30 per share payout due in April 2024, reflects their robust financial health and commitment to shareholder returns. This gesture underscores their confidence in GEG’s future and Macau's broader market potential. In alignment, the company continues heavy investment in development, totaling $5.5 billion for 2023, reinforcing their long-term dedication to the region’s vision as a global tourism and leisure center.
Strategic developments aim to enhance GEG's competitiveness and appeal. Galaxy Macau's Mass business triumphed by achieving 126% of 2019’s levels, while ongoing enhancements like major gaming floor renovations and heightened non-gaming offerings aim to bolster appeal. The opening of overseas offices in Tokyo, Seoul, and Bangkok align with the strategy to attract a more international visitor base to Macau, showcasing GEG's commitment to broaden its market reach and support Macau's governmental tourism goals.
Efficient cost management is a cornerstone of GEG's strategy, demonstrated by a disciplined staffing approach that resonates with 93% of 2019’s staffing levels. This careful control of operational expenses, especially with staff costs constituting about 75% of operational expenditure, positions GEG to leverage potential market gains without the burden of excessive overheads.
While GEG acknowledged a market share slip below 18%, their ability to enhance the gaming floor and integrate cutting-edge RFID technology is expected to recapture and bolster their market position. The optimistic outlook for mass and premium mass segments signals potential market share gains in these areas. Moreover, GEG's commitment to investment, both operational and expansionary, ensures readiness for Macau's anticipated influx of base and casual mass customers in 2024, providing a pathway to recapture 2019's performance benchmarks.
GEG is actively reimagining their offerings, aligning high-end luxury hotels and rental strategies with market demand. The introduction of performance-based rental mechanisms for luxury tenants demonstrates adaptability, while the upcoming high-end Andaz hotel and 3D projects are primed for premium customers, directly connecting luxury with entertainment – a strategic move to attract discerning guests. Looking forward, GEG has pledged $5.1 billion in CapEx for Phase 4 development in 2024, with additional expenditures planned to meet increased investment commitments under the gaming concession agreement.
GEG's management is attentive to both their CapEx and OpEx commitments, indicating a roughly 50-50 split between these expenditure areas in 2023. GEG’s ability to generate significant free cash flow, even after substantial commitments, underscores their strong operational performance and EBITDA generation. With the new concessionary period, GEG is looking forward to possible discussions regarding increased gaming tables, especially for the anticipated Phase 4 casino, reflecting a strategic approach to asset turnover and growth prospects.
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Thank you for holding, and welcome to the Galaxy Entertainment Group's Management Update for the Fourth Quarter and Annual Results of 2023. 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. [Operator Instructions]
I would now like to pass to Mr. Chan for our presentation. Mr. Chan, please go ahead. Thank you.
Thank you, operator. Hello, everyone, and thank you for joining us for the update call on GEG's Q4 and 2023 annual results. Joining me here on today's call is Roland To and Peter Caveny. Copies of our media release, stock exchange announcement and PowerPoint presentations are available on our website, which also include our customary disclaimers.
Macau continued to rebound due to the pent-up demand, particularly from Mainland China, where Q4 visitors number reached 5.7 million in the quarter, up 383% year-on-year, though there was a slight 2% decrease from Q3. In 2023, total visitor arrivals were 28.2 million. The MGTO has forecast that 2024 will see visitor arrival grow to 34 million.
The market GGR in Q4 was $52.5 billion, up 11% quarter-on-quarter. The Mass Market segment has been instrumental in this upward trend. For Q4 2023, GEG reported EBITDA of $2.8 billion versus a loss of $163 million over the same period last year and essentially flat quarter-on-quarter. We played unlucky in Q4, which reduced our EBITDA by $103 million. We are pleased to see a continued ongoing recovery in both visitors arrivals and associated gaming revenue, and we are pleased with our results.
We paid a special dividend of $0.20 per share on 27th October '23. Today, we announced another special dividend of $0.30 per share payable in April '24. Our special dividend certainly demonstrate our continued confidence in the Macau market and GEG's future performance as well as our commitment to return capital to shareholders.
We strongly believe in the future of mass gaming and entertainment. And importantly, the mass offers a more sustainable and stable revenue stream. Throughout 2023, GEG has experienced a progressive recovery in Mass revenue compared to 2019. At the reopening in Q1, our Mass revenue was 67% of 2019's level, which we have grown to 107% in Q4.
In Q4, Galaxy Macau's Mass business performed well, achieving 126% of 2019's level, where StarWorld was approximately 75%. GEG has a track record of developing high-quality resorts that have proved to be highly attractive to visitors. We continue to refine and upgrade our resorts to make them even more appealing. We are particularly focused on driving our higher-value customer to our properties and converting more of our non-gaming customer to gaming.
In quarter 4, we were still onboarding our full complement of staff and undertaking significant main gaming floor renovation at Galaxy Macau. In late 2023, we relocated the central premium mass high-limit gaming area and added a number of F&B options. We are also currently completing the construction of a new high-limit slot area and other amenities. At StarWorld, we are evaluating a range of major upgrades, that includes the main gaming floor, the lobby experience and increasing F&B options.
We are halfway through Q1 and Macau's recovery continues. For the recent Chinese New Year period, our hotels were effectively fully occupied, and the group's mass drop in revenue was 120% of 2019's level.
GICC and Galaxy Arena have proved very popular. Throughout the year, GEG held approximately 200 MICE events and 85 concert and performances across GICC, Galaxy Arena and Broadway Theatre. We believe strongly that entertainment will expand the addressable market and drive new customers to Macau and our properties.
We continue to work hard at managing our cost structure. Our current staff number is equivalent to 93% of 2019's level even after the opening of Phase 3, including the full opening of Andaz. Staff costs represent around 75% of our OpEx.
Our unwavering confidence in the future prospects of Macau is reinforced by our significant investment in the business. During quarter 4, we invested approximately $1.4 billion into development, bringing the full year investment to $5.5 billion. And in accordance with the gaming concession agreement, we will increase our investment commitment by 20% over the terms of the concessions. This is a testament to our long-term dedication to helping Macau achieve its vision of becoming a World Centre of Tourism and Leisure.
Development of Phase 4 is well underway and is scheduled to complete in 2027. We will continue to adjust the development time line in accordance with the market demand. We believe that with the many additional facilities that we have added and will continue to add in the future will position us strongly for longer-term growth.
Additionally, to support the government's goal of expanding international visitors to Macau, we have opened our overseas offices in Tokyo and Seoul, and we are opening an office in Bangkok soon. Last, on the balance sheet. Cash and liquid investments were $25 billion at the end of December 2023, and we are in a net cash position of $23.5 billion.
That concludes my prepared remarks. Operator, please begin the Q&A session.
[Operator Instructions] We'll now take our first question from D. S. Kim from JPMorgan.
First of all, I think our market share in fourth quarter did slightly below 18% in the last quarter. And I'm wondering if you could share with us how was our January market share given GGR was already public. That's the first question.
And secondly, as you also remarked in the prepared remarks, we noticed a number of updates and upgrades on the gaming floor and some of the F&Bs. And can you give us a summary or recap of what we are doing to achieve our fair share, if you will, in coming quarters and years, how some of those -- the premium mass areas and whatnot could help us achieve our goal?
And like [ there ], as you know, a lot of discussions on like smart chips, RFID tables and whatnot, like Walker Digital and those vendors. And can I ask what's our plan for this -- the use of technology, some time line and how we can fine tune operationally to help, again, gain our fair shares in coming quarters? And I may have a follow-on after this.
Sure, D. S. I think allow me to answer the question in more details as the following. So first of all, I think I do not -- I'm not able to provide a number on this quarter, but I can surely acknowledge their share price. The market share decline recently was actually below 18%.
And look, I would like to offer the following thoughts. We believe the market share decline is not a fundamental shift from our players' preferences. And we strongly believe that what we've built is with very high quality and aligned with our customer expectations, to be honest. And we are also very proud of our service delivered by our team members.
So look, Macau has transformed successfully from a VIP junket-focused market to a more mass-centric. And the demand from this mass or premium mass customers actually is surging. And they are not purely looking at one price point on the gaming experience, but many, many others.
So we think that importance of non-gaming and particularly entertainment is important to drive and retain our discerning customers in this market. So we believe that GEG has built very high-quality resorts and especially in Phase 3. So we are not just ticking all the boxes, but we believe that we are the leader in terms of this in the regions.
But having said so, we do recognize that the market share declined in recent quarters, and we identified there could be some technical issues. It's not a fundamental shift. And that technical issues really demand us to pay more attention to our sales and whole system in our company. And I can assure you that we are addressing it now.
And looking forward and as I mentioned earlier in my opening remarks, we've done some gaming floor reconfigurations, so basically relocating the central high-limit area to the south part of the area. And we also added some F&B option into that. The whole area is actually completed before the Chinese New Year. We are also adding some high-limit slot area going forward. So effectively, we believe that, that will be reflected into a number perhaps in the next few months.
So looking at some of the technologies that you mentioned, the RFID, of course, that will contribute to a lot of improvement in effectiveness and efficiency of the gaming floor as well as the integrity of the floor. We're already starting the process, and we are planning to launch out all these technology-related initiatives during the year.
So trust us, GEG really maintained the most stable senior management team. We are no stranger to the competition environment, and we are confident that we're addressing the market. But in general, in the end, we believe the market is picking up that all of us can share our fair share. And in large, we believe that we should be competing in quality, service, size, creativity and variety of products, which place Macau as the top destination of our customers.
I hope that my long elaborations of my answer could actually address some of your concerns, D. S.
And yes, you did. And thanks a lot for the insight and comprehensive recap. And I cannot agree with you more in that our products are definitely best-in-class quality in Macau, if not in the world. So I just hope that we can get our fair share sooner than later.
But if I may ask a couple of housekeeping questions as a follow-up. First, can I ask our CapEx budget for this year, if possible, breakdown by main tenants versus Phase 3 and for the new chapter expansion versus like government -- the concession-related commitment, if possible?
And then second question is, when you earlier -- sorry, I missed your remark earlier, you said 120% of 2019 level for CNY. Did we talk about mass drop only or mass GGR? Or are we referring to GEG or Galaxy Macau? Just a clarification, and I'll go back to the queue.
Yes, no problem. So regarding the Chinese New Year period, the 120% refers to both drop and mass gaming revenue of the GEG level.
In terms of the CapEx, we spent a total of $5.5 billion in the year 2023. And majority of that is expansionary rate, and we only spent very small amount in terms of maintenance CapEx. I'll give you a number, which is lower than $300 million in terms of maintenance CapEx, most of it is expansionary CapEx, including Phase 4 and Phase 3.
I'm so sorry, but when I say this year, I mean I follow up on 2024 this year, like 2024 budget for CapEx. Sorry for that.
No problem. 2024, we are looking at Phase 3 and Phase 4, predominant Phase 4, investing around HKD 5.1 billion.
That's a Phase 4-related CapEx, and I suspect we have a bit on Phase 3 and the main kind of concession-related, right?
Yes, that will be less than $1 billion additional to that.
[Operator Instructions] The next question is from Praveen Choudhary from Morgan Stanley.
I have 2 questions. One, I wanted to understand the segmentation on grind versus premium mass in terms of how they are tracking. And I understand most of the other competitors are now focused on premium mass. Do you think that because of which to gain back the market share, you may have to throw or spend more money on promotions, which can result in higher spending across the board for the entire sector? Or you think that just by product innovation and managing the host system, you don't have to increase the OpEx or promotional expenses? That's the first question I have.
The second question I had was in EBITDA recovery. So EBITDA recovery as a percentage of 2019 has been a little bit lower than some of your peers. And then this is despite, obviously, more capacity that has been added in the last year in Phase 3. So I just want to understand, do we have a plan to get back to market level of recovery in 2024? That's it for me.
Great, Praveen. So let me address the -- I think I mentioned something about the product initiative as well as the sales and whole system improvement. For sure, we are also looking at alignment with the premium segment in terms of pricing as well. But premium market is actually a big segment ranging from a very low ADT level to a very high one. We do identify that we should have done a better job in terms of looking at the higher premium market segment than we are looking at our sales force, focus on this area. So that's one thing.
And secondly, I think in terms of reinvestment, if you look at our Q4, it's actually a little bit lower than Q3. So we should be able to adjust it a little bit on addressing that matter. So that's on the premium mass. But if you look at the -- our numbers, the premium mass area, in general, is doing better than on base mass and casual mass. Base mass and casual mass has not really reached out to up to 2019's level.
So these are the areas subject to recovery of the visitor arrivals numbers, and we believe that 2024 will be a great year when these base mass and casual mass coming back to Macau, and we should be able to capture our fair share on that particular segment. So addressing these 2 segments, hopefully, we could be seeing a bit of regaining some of the market share that we lost in the last few months.
In terms of the EBITDA, look, perhaps Galaxy's [ GEC ] a bit different from some of the market players, whereby we not only have to keep up with the 2019's operational level, but also we are expanding in Phase 3. So we're expanding our property. So inevitably, in Q3 to Q4, we continue to increase on the OpEx.
So currently, our number of staff is about 93% of 2019's level. So we believe that we will be tied with 2019's level in terms of total OpEx around this quarter. So I believe that the OpEx and offerings in the companies will be quite stabilized in this quarter. So going forward, you see a more meaningful operating leverage or operating flow-through happening in the next few quarters. And hopefully, we can try our very best to improve our EBITDA level as much as we can to reach the 2019's level.
Ted, this is super clear. Can I just follow up a question that D. S. was asking on the CapEx? Did you mention that you will spend growth CapEx on Phase 4 of $5.1 billion, but other CapEx of $1 billion? Just wanted to make sure that $1 billion includes the government commitment. Remember, we have to spend a lot of money on OpEx and CapEx.
So the $5.1 billion is actually on Phase 4. That's on the plan. The additional CapEx is more on the expansion and requirement. For instance, at Galaxy Macau and also StarWorld, we're doing some of the amendments on the offering. So that will be something that we're looking at. That does not include any of the CapEx requirements.
We are [ subject still ] in the process of getting the approval, especially after the $180 billion last year triggered another 20% increase in our commitment. So overall, we should be spending a bit higher on this number. Our 3 10-year tender commitment to the government is over $30 billion. So you may believe that we are spending on top about $3 billion CapEx and OpEx.
The governments are quite flexible at this stage when we talk with them in terms of mix between CapEx and OpEx. So that's why I cannot really give you a clear number in terms of the CapEx number. But all of these commitments are actually embedded into our operations in both CapEx and OpEx.
We will now move to our next question from Ronald Leung from Bank of America.
So I have 2 questions. My first question is a follow-up of your previous remarks. Could you please share a bit more details on how you are planning to revamp your sales and host system? This is my first question.
Another question is about your new hotel, which is part of the Phase 3 with 100 hotel rooms. Could you share any time line of that hotel, like when will it be launched?
Okay. So let me elaborate a bit. So I think this is a known mechanism in terms of -- or with -- on the premium mass space. So the premium mass customer, particularly the high-end premium mass customer, normally we're taking care by the host and service. We find that now as a big opportunity for us to focus a bit on this particular high-end premium mass customer space.
We do have -- I personally believe that we have a bigger fair share of database in terms of this space. We just need more of our sales force to [ follow up ], and we are in virtue of focusing a bit on this area, so which means it's more internal that we are increasing the number of sales force to target on these customers. So that's what I'm referring to.
The 100-room property, that will be -- what we call 3D projects as part of the Phase 3 project, we are targeting to open in 2025. And that will be a very high-end luxury product and very unique in the market. And that will be also -- I believe that will address very, very much on the very high-end premium mass segment that we are looking at. Unfortunately, we probably will be able to launch next year. We'll try our very best to align with the timetable in terms of launching that project.
[Operator Instructions] And our next question comes from Simon Cheung from Goldman Sachs.
I just have also 2 questions. When I look at your phasing of the new project, you have launched Phase 3 late last year, then you have 1 more year down the road, you have that 100-room, then you need another maybe 2 years down the road then you do Phase 4. Whereas I think some of your competitors, like [ London ], now they're obviously rushing and keep talking, telling the market that they want to get everything done by Chinese New Year 2025, for example.
So I just wanted to get a sense that from your perspective when you think about phasing it, was that demand really an issue of demand? Because you mentioned -- you did mention that your hotel room is actually fully occupied. So I just wonder why wouldn't you -- why didn't you get it done earlier? Or is there other consideration? Because I guess, financially, you are actually quite healthy to your point about net cash position. I think that's the first question.
And then on the second question, just following up on, I think, what D. S. were asking. Just in relation to that commitment -- non-gaming commitments, the concessionary, whether it's CapEx or OpEx, wondering if you can share with us, if possible, whether it's in aggregate or in a breakdown format, what you had incurred last year and what you would be incurring this year?
All right, Simon. In terms of phasing, we always talked about we would like to time the opening in accordance with the market demand. And last year, when we opened up, we -- in the first half of the year, we are quite not sure the market will end. But effectively, it's quite good in terms of recovery as experienced last year. So we have quite confidence in the market. We are quite confident in the recovery as well as market -- as Macau as a top destination for our [ previous ] market.
We're full on. And we have to appreciate though that building a brand-new building, it's quite different from renovations or modifications of the property. So there's a lot to do with the construction's time line. Rest assured, we are trying our very best to open as soon as we can. That's also our mindset at this time. So in summary, the super high-end luxury, 100-room project will be available next year, 2025. And we have time on the Phase 3 -- Phase 4 opening in 2027. So we'll try our best to deliver that phase.
In terms of commitment to the government, last year, we did a little bit more than $3 billion in the total in terms of CapEx and OpEx commitment to the government. In this year, what we submitted to the government so far and approved by the government so far was around HKD 3 billion. And we are -- because of the mechanism to improve and increase the 20% commitment amount, we shall be submitting our proposal to the government sometime in April, and subject to approval by the government, probably around middle of the year. So we'll have more clarity on the overall, but let's say, a ballpark of a little bit more than $3 billion in terms of total commitment for 2024.
Actually, one more point, one more question I want to ask. Just on your point about high-end premium mass customers because, obviously, that's a segment seemingly everyone has been chasing. I just wanted to get a sense about the margin profile. Are we talking about margin profile getting as close as your direct VIP? Or is there still some sort of a room that you can actually making a bit more margin out of the premium mass segment, at least on the high-end premium mass? And therefore, by driving that premium mass segment, high-end premium mass segment, I just -- perhaps I want to get a sense about the gross margin impact overall.
All right. In terms of the very high-end premium mass, absolutely it's actually higher than the premium direct. So the premium direct is around 20%. If you take into the account of some provision for bad debt, it's even lower than that number. For the high-end premium mass segment, I think it is actually higher than that number and from what I can see in our book.
And we will try very hard to not looking into the price point, but also in a lot of other soft touch and soft offering in order to improve that segment. So rest assured, we have a very, very important and good module to look at that area. So give us some time. We hope the result will be seen in the next few months.
We will now move to our next question from Shengyong Goh from CICC.
Just a couple of questions. First one is on new high-end products and alongside with Andaz, will we actually have plans for casino operations in Andaz and/or at the high-end hotel product? Yes, so I'll have a follow-up one.
Currently, Andaz is actually used for purely for a non-gaming joint with a couple of reasons. First of all, I think it makes more sense with Andaz sitting on top of the Arena and MICE. It makes more sense for alignment with these type of customers.
And secondly, they will release more inventory for us to focus on the gaming customer on the Galaxy area. The proximity to casino gaming areas are one important element that we should also consider apart from the quality of the rooms. So I think we believe that having Andaz sitting as a pure non-gaming, allowing more rooms for the gaming customer makes sense to us.
And for the high-end hotel product?
For the high-end hotel product that will be due to open next year, that will be only for our top premium mass customer and our VIP direct customer.
I'm sorry, my question was, will we have a casino product at the Phase 3D? Or will it be similar to Andaz where we do not have additional products? Yes.
Sorry. Okay. So first of all, there will be no casino in Andaz at all. And 3D is actually connected directly to the gaming floor. So that's -- there's no casino in that, but it's actually directly on the casino floor. So no problem with that.
Got it. All right. My second question is actually to do with our rental -- net rental in Galaxy Macau. So I mean it's -- so given that most of -- the whole of '23 is pretty much back to the normal, so -- and the revenues are a little choppy. So I'm just wondering, are our high-end luxury tenants on a turnover program? Or are they on a fixed-based rent program? Because like -- yes, so just trying to understand the choppiness of the rental revenue.
We have a mix of base and turnover rent on all the shops. But for the luxury one, of course, different shops have different agreements. But in general, over the last few quarters, all turnover rent mechanisms kicked in, so which means it's more than a base. So some of the base rent is coming from maybe Phase 1 or Phase 2 area. But for the performing ones, all of them are on the turnover rent already. So our treatment is a bit different from some of the other operators. We do the calculation on a monthly basis. So on the monthly turnover, we're seeing such change already in the next -- in the last few quarters.
We'll now move... [Audio Gap]
[ Brian Wong ], your line is open.
So my question is also on our long-term CapEx front because when I look at our concession contract with the government, so I see that and the overall amount is actually not very high compared to our CapEx for Galaxy Phase 3 and Phase 4. So I just wondered if there will be any potential increase on that because I was thinking that these requirements in the middle of the 20 -- 20 years ago, you will say that, hey, I want you guys to pay more [ incent ] for this contract. So I just wonder if that -- so will that be a risk for us?
And secondly, I think that you are opening more hotel rooms, so which is a good thing. So I just wondered, is it possible for us to get more tables, so if we promise to spend more on the non-gaming side? Yes.
All right. So thank you for the questions. Let me address the second question first before I go to the first one. I'll have to clarify on the first one.
For the tables, well, the gaming concessions just renewed since last year. So we just passed 1 year of the new gaming concession renewal. We haven't heard from the government in terms of the flexibility of increasing the number of tables to the concessionaire. We hope so. In the past history in Macau, we believe Macau governments are very, very pragmatic and they address a market issue accordingly. So we have past history of the Macau Government aligning the demand of the gaming tables.
So while we haven't heard anything from the government, but if you look at on a fair basis, we did a lot. We basically listened to what the governments want us to do in terms of performing the non-gaming. And we think that we are one of the largest contributor in terms of non-gaming investment in Macau, if you look at the numbers carefully.
In the future, if there is any opportunity for a table increase, we definitely would be the first one to raise our hand for more tables. So particularly our Phase 4, currently, our plan is actually we have a casino in Phase 4. And before the opening, definitely, we'd like to clarify with the government if there's any possibility to have more tables to allocate to the guests. In terms of the commitment on the non-gaming commitments to the government over the next 10 years, I cannot comment much on whether we have a fair share in terms of the non-gaming commitment. But overall, we're happy with what the government in terms of our submissions. And we think it's fair that we submit the plan last year and deliver what we've delivered, which is around $3 billion of CapEx plus OpEx. And for this year, we also do similar and which is also in the ballpark number around $3 billion for this year.
The governments are also flexible in terms of changing intra-year in terms of CapEx and OpEx mixes. It really depends on each operator's demand. So it's still the beginning of the year. So we will submit another submission sometime around April, and hopefully, we get more clarity by the mid of the year.
Sure. Sure, understood. So my question is also on the $3 billion that you started on the non-gaming side in both CapEx and OpEx. So I wonder, can you tell me to roughly break it down, for example, because it can help me to better understand your core structure and also your margins?
Sorry, I think you're referring to our commitments, which is 2/3 on OpEx and 1/3 on CapEx, correct? So on all the non -- all the OpEx, which is 2/3 of it, is all embedded in our operations, which is all in our marketing, our events, including Arena, et cetera. So these margins actually reflected in the F&B, in the Entertainment segment and also the Arena segments in there.
Okay. Sure. So in terms of 2023, so the breakdown between OpEx and CapEx is also like 2/3 is on the OpEx side as well?
In terms of the 2023, the plans are still 2/3 and 1/3. But eventually, after Q4, we close the book, it's eventually roughly 50-50 in 2023. Yes.
Okay. Okay, sure. Got it. And also, so if I -- when I project your free cash flow, so on the [ right ], so when I project is the longer time, I found out that after your Phase 4 CapEx, so I see a little bit free cash flow could increase tremendously. So if there's no new projects, so I wonder if you are trying to -- so if you have any long-term projects outside of the Phase 4?
Yes. If you look at the free cash flow generation and lump into the non-gaming commitment, it's not an easy job. So -- because we embed everything in the operation, we do not have a separate line stating the non-gaming commitment.
So I believe if you look at the cash flow number, the net cash at the moment, $23.5 billion actually. Effectively, I'm telling you that even we commit -- we generate -- sorry, we committed and delivered $3 billion into last year, we'd still be able to generate a similar number as EBITDA generated. So it's a bit complicated, but you can see EBITDA number, EBITDA margin, but also the cash position of the company.
There are currently no further questions in the queue.
All right. Thank you very much for joining us for the Q4 annual results. I'll see you on the next quarter's call. Thank you very much.
Thank you. This is the end of the Galaxy Entertainment Group's conference call. Thank you for joining us today. You may now disconnect.