GGRAsia – SJM Holdings 3Q profit up 5pct despite VIP gaming rev slump

SJM Holdings 3Q profit up 5pct despite VIP gaming rev slump

Oct 29, 2019 Newsdesk Latest News, Macau, Top of the deck

Profit at Macau casino operator SJM Holdings Ltd increased 4.5 percent year-on-year in the third quarter of 2019, according to unaudited business performance highlights filed with the Hong Kong Stock Exchange on Tuesday. Such profit was HKD738 million (US$94.1 million) in the three months to September 30.

The increase in profit was despite a 3.2-percent decline in net gaming revenue, said the firm. Such revenue was approximately HKD8.06 billion during the reporting period.

The group’s VIP gross gaming revenue (GGR) for the three months ending September 30 was HKD2.89 billion, a decrease of 42.6 percent from the HKD5.04 billion achieved a year earlier.

Market-wide, VIP baccarat GGR in Macau fell by 22.5 percent year-on-year in the third quarter, according to government data released earlier this month.

Total VIP chip sales for SJM Holdings during the third quarter of 2019 were HKD93 billion, compared to HKD166 billion a year earlier. VIP gaming hold percentage – before commissions and discounts – was 3.10 percent, versus 3.04 percent in the third quarter of 2018.

SJM Holdings’ mass-market GGR in the three months ending September 30 was almost HKD6.31 billion, an increase of 12.1 percent in year-on-year terms. Slot machine GGR was HKD298 million, up 4.6 percent from the prior-year period.

SJM Holdings’ 16 satellite casinos – i.e. third party-promoted gaming operations – generated quarterly aggregate GGR of approximately HKD5.06 billion in the July to September period.

Ambrose So Shu Fai, chief executive of SJM Holdings, said in a statement accompanying the results highlights: “In spite of challenges in the global economy, the revenues and earnings from our mass-market gaming business have more than compensated for the uncertainties which are affecting VIP gaming in Macau.”

Grand Lisboa Palace ‘nearing completion’

The firm’s capital expenditure during the third quarter of 2019 was HKD1.08 billion, which was primarily for “construction in progress” and furniture, fixtures and equipment. The company is currently building a new casino resort – named Grand Lisboa Palace – in Macau’s Cotai district.

SJM Holdings noted in its filing that construction of Grand Lisboa Palace was “nearing completion”. It added: “The group expects pre-operating government inspections to begin shortly.”

SJM Holdings did not provide any guidance regarding the potential opening date of the property. Company management stated at the beginning of the month that the firm still expected the opening of Grand Lisboa Palace to be “in the second half of 2020”.

Banking group Morgan Stanley mentioned in a recent memo that the opening of the approximately 1,900-room, HKD39-billion Cotai scheme could be delayed until January 2021.

During the three months ending September 30, SJM Holdings operated an average of 286 VIP gaming tables, a slight decline from the 291-unit average recorded a year earlier, said the firm in its Tuesday filing. SJM Holdings had an average of 1,503 mass-market gaming tables in the third quarter of 2019, up 95 units in year-on-year terms; and 2,563 slot machines, down 2.8 percent from the prior-year period.

The group’s total net revenue – of approximately HKD8.24 billion – in the third quarter 2019 included a combined HKD181 million from hotel, catering and related services, compared to HKD182 million from those activities in the prior-year period.

SJM Holdings’ group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) in the three months to September 30 increased by 3.4 percent year-on-year, to about HKD950 million.

The adjusted EBITDA margin of the group in the third quarter – i.e., adjusted EBITDA divided by total revenue – increased to 11.5 percent from 10.8 percent in the third quarter of the prior year.

During the third quarter of 2019, the group’s flagship property on Macau peninsula – the Grand Lisboa casino hotel (pictured) – achieved an average occupancy rate of 91.3 percent and average room rate of HKD1,516 per night, as compared with average occupancy rate of 94.0 percent and average room rate of HKD1,458 per night in third quarter 2019.