SJM Holdings profit tumbles 81% as VIP gamblers give Macau a wide berth

TAGs: Macau, SJM Holdings

sjm-holdings-profit-fallSJM Holdings, Macau’s original casino operator, saw profits fall over four-fifths in Q3 as VIPs continue to avoid Macau like the plague.

Macau casinos reported their 17th straight month of gaming revenue declines in October and recent weeks have seen other Macau casino operators report double-digit declines in revenue and profits. But none of those horror stories matched SJM’s profit fall.

SJM says gaming revenue in the three months ending Sept. 30 was down 38% to HKD 11.2b (US $1.45b), while earnings fell 49.5% to HKD 884m and profit slumped 81% to HKD 285m. However, the company says profits would have fallen a mere 65% were it not for a HKD 250m impairment charge on one of its investment instruments, so, er, hooray?

Total VIP gaming revenue across all SJM properties was down 47.5% to HKD 5.4b. VIP win rate improved nearly half a point to 3.36%, above the theoretical win range, which partially offset a 55% decline in VIP turnover. Mass market table revenue was down 24.9% to HKD 5.5b while slots and Tombola revenue fell 24% to HKD 272m.

The thinning herds of VIP gamblers forced a significant year-on-year shift in SJM’s table mix, with VIP tables falling by 106 to 458, while mass market tables increased by 73 to 1,263.

SJM’s flagship Casino Lisboa property mirrored the company’s overall results, with revenue and earnings each down around 49%. The Grand Lisboa Hotel saw a hefty decline in occupancy rate, slipping 5.5 points to 85%, despite its average room rate falling 23% to HKD 1,743 per night.

SJM’s share of the overall Macau casino market was also in retreat, falling 1.2 points to 21.3%. On the plus side, SJM remains a cash cow, with nearly HKD 18b ($2.3b) on hand versus just HKD 760m in debt.

SJM CEO Ambrose So acknowledged that the Macau casino game was increasingly becoming a blood sport but said the company’s strong balance sheet left it “optimistic about the future.” That future includes the Lisboa Palace, SJM’s first property on Cotai, which the company says remains on schedule and on budget to open in Q4 2017.


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