GGRAsia – SJM posts US$390mln 2020 loss, Cotai scheme in 1H

SJM posts US$390mln 2020 loss, Cotai scheme in 1H

Feb 23, 2021 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd has reported a net loss of nearly HKD3.03 billion (US$390.2 million) for full-year 2020, on revenue that fell by 77.8 percent in year-on-year terms. That compares with a profit of approximately HKD3.21 billion in the previous year, according to a filing on Tuesday to the Hong Kong Stock Exchange.

Such revenue for the 12 months to December 31 was just below HKD7.51 billion, compared with HKD33.88 billion in 2019. Gaming revenue for 2020 was nearly HKD7.30 billion, down 78.0 percent from the previous year, the group said in its latest filing.

SJM Holdings operates its current casino hotel flagship, Grand Lisboa (pictured), on the city’s peninsula, and is still to open a Cotai property – the HKD39-billion Grand Lisboa Palace.

In Tuesday’s filing, the firm said it now “anticipates” opening its resort scheme on Cotai “during the first half of 2021”. In October, the firm had mentioned it opening by the “first quarter of 2021”.

“Construction work on the Grand Lisboa Palace … has been completed and application has been made for the relevant licences [in order] to begin operation in the first half of 2021,” added the casino firm.

As at December 31, 14 gaming venues in Macau were managed by third parties but were using the SJM Holdings’ gaming licence.

In its Tuesday announcement, the group said its board had not recommended the payment of a final dividend for 2020. The company had recommended a 2019 final dividend of HKD0.22 per ordinary share, totalling just under HKD1.25 billion.

The group’s 2020 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were negative to the tune of nearly HKD2.09 billion, compared to a positive result of HKD4.21 billion a year earlier.

Ambrose So Shui Fai, vice chairman and chief executive of the group, was quoted saying in a press release accompanying the 12-month numbers: “Although SJM’s results for the full-year 2020 reflect the severe reduction in travel and tourism caused by the Covid-19 pandemic, we are encouraged to see the beginnings of recovery starting in the fourth quarter.”

He added: “We expect continued gradual restoration of business throughout 2021, during which time our Grand Lisboa Palace will be inaugurated, marking our entry to the Cotai sector of the market.”

4Q EBITDA loss

The company however still reported an EBITDA loss for the final three months of 2020, according to investment analysts. SJM Holdings posted a fourth-quarter EBITDA loss of HKD323 million, compared to a positive result of HKD1.19 billion a year earlier. The result was still a sequential improvement from the HKD782 million EBITDA loss reported in the third quarter.

Investment bank JP Morgan said in Tuesday note that, despite the positive impact from several one-off items, SJM Holdings was the “only Macau operator” so far to have reported a fourth-quarter EBITDA loss. “But it’s somewhat understandable as SJM has been carrying excess staff (up to 2,000) who will be transferred to Grand Lisboa palace upon opening,” it added.

Aggregate casino gross gaming revenue (GGR) for the three months to December 31 was HKD2.43 billion, down 76 percent year-on-year, but 157-percent more compared to third-quarter 2020. The result was however “weaker than the overall market,” suggested brokerage Sanford C. Bernstein Ltd in a Tuesday memo.

SJM Holdings indicated its share of Macau-market casino GGR had not changed in 2020 compared to a year before.

It said in its Tuesday filing its slice of such GGR was 14.1 percent, including 19.7 percent of mass-market table gaming revenue, and 8.0 percent of VIP gaming revenue.

For the 12 months to December 31, 2020, group VIP GGR slipped 85.1 percent year-on-year, to just under HKD2.04 billion. That was on VIP chip sales that fell 86.1 percent year-on-year, to HKD58.30 billion.

Full-year mass-market table GGR fell by 76.7 percent year-on-year, to nearly HKD5.86 billion. Slot machine GGR for 2020 decreased by 68.0 percent from the prior year, to HKD379.3 million.

The group said that in 2020 it had maintained its “strong balance sheet”, with cash, bank balances, short-term bank deposits and pledged bank deposits totalling just above HKD6.27billion as of December 31, 2020.

In January, SJM Holdings announced an exercise to raise approximately US$991 million net, via an offering of two tranches of U.S.-dollar denominated senior notes, due respectively in 2026 and 2028.

(Updated at 9.36am, Feb 24)