GGRAsia – SJM slips to 1H loss amid pandemic, market share up

SJM slips to 1H loss amid pandemic, market share up

Jul 28, 2020 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd (SJM) slipped to a first-half loss, on group net revenue that fell 74.4 percent, it said in a Tuesday filing to the Hong Kong Stock Exchange. The firm said the result was related to the impact of Covid-19 on its operations.

Group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the period fell into negative territory. But the group said it achieved a 0.9-percentage point increase in casino gross gaming revenue (GGR) market share in Macau.

SJM Holdings’ first-half loss was just over HKD1.41 billion (US$182.2 million) compared to nearly HKD1.68-billion in profit for the prior-year reporting period.

The firm’s board did not recommend an interim dividend for the six months to June 30. In the prior-year period it paid HKD0.08 per share.

Group net revenue for the six months to June 30 was HKD4.37 billion, versus HKD17.07 billion in the prior-year period.

First-half net gaming revenue was HKD4.27 billion, down 74.4 percent. Group adjusted EBITDA was negative by HKD984 million. Such adjusted EBITDA compared to positive HKD2.08 billion in first-half 2019.

“SJM’s first-half results reflect the severe contraction in travel and tourism caused by the Covid-19 pandemic,” said Ambrose So Shu Fai, the group’s vice-chairman and chief executive, in comments contained in a press release issued the same day.

He added: “In this environment, we strive to control our running costs at a prudent level.”

The CEO also stated the group was “working closely” with the Macau government to complete the procedures to open its first large-scale gaming resort on Cotai, the HKD39-billion Grand Lisboa Palace.

The release said that “subject to obtaining the necessary operating permits, the project is expected to open by the end of 2020”.

SJM Holdings’ existing self-promoted casinos are: Casino Grand Lisboa at Grand Lisboa; Casino Lisboa inside Hotel Lisboa; Casino Oceanus at Jai Alai – including the gaming area in the Jai Alai building; and Casino Taipa. Casino operations at Casino Eastern, at the Hotel Grand Lapa building, are currently discontinued, according to the Macau government.

The group’s VIP GGR at self-promoted sites for the first half was down 81.6 percent, at just under HKD834 million, versus approximately HKD4.53 billion a year earlier.

Table tally, market share

As of June 30, SJM Holdings had 192 VIP gaming tables in operation in its casinos (including satellite casinos), with 14 VIP promoters, as compared to 275 VIP gaming tables and 15 VIP promoters as of December 31.

Overall in the first half, SJM Holdings’ casino operating unit had a 15 percent share of Macau’s gaming revenue. For first-half 2019 it had reported a 14.1 percent share of Macau’s gaming revenue which had been described by a brokerage at the time as a historic low .

In this year’s first half, VIP gaming operations accounted for 28 percent of the group’s total GGR, as compared to 36.5 percent for the corresponding period last year.

The group’s VIP GGR in the latest reporting period amounted to approximately 8.6 percent of total VIP gaming revenue in Macau, compared to 10.7 percent in the corresponding period last year, said the firm, citing figures based on comparison with market data from the local regulator.

SJM Holdings operated a total of 851 mass-market gaming tables as of June 30, as compared with 1,511 mass-market gaming tables as of December 31.

Mass-market table gaming GGR comprised 67.2 percent of the group’s total GGR in the reporting period, as compared to 60.7 percent in the corresponding period last year.

The group’s first-half, mass-market table gaming revenue accounted for approximately 22 percent of total mass-market table gaming revenue in Macau, compared to 18.2 percent in the corresponding period last year, it said, citing a comparison based on local regulator data for the market.

SJM Holdings had 1,084 slot machines, operating in 11 of its casinos, as of June 30, compared with 2,439 slot machines as of December 31.

First-half slot machine GGR was down 59.2 percent year-on-year, to HKD235 million, from HKD575 million.

Such slot GGR was 4.8 percent of the group’s total GGR in the reporting period, as compared to 2.8 percent in the corresponding period of last year.

In the reporting period, the group’s slot GGR was approximately 12.2 percent of total slot revenue in Macau, compared to 7.9 percent in the corresponding period last year, said the firm, citing comparison with market data from the local regulator.

During the first half, Hotel Grand Lisboa contributed HKD84 million in non-gaming revenue and negative HKD100 million in adjusted EBITDA to the group, as compared with HKD256 million in revenue and HKD13 million in adjusted EBITDA for the corresponding period last year.

As of June 30, SJM Holdings provided its licence to 15 so-called satellite casinos operating a total of 514 mass-market gaming tables, 78 VIP gaming tables and 510 slot machines. In those scenarios, the group shares economic value with other parties.

GGR from satellites was down 74.4 percent, at HKD2.70 billion, compared to HKD10.55 billion in the prior-year first half.