On Wednesday, SJM issued a trading update covering the three months ending March 31, during which time gaming revenue fell nearly 29% to HKD 11b (US $1.4b), adjusted earnings fell 32.5% to HKD 838m ($108m) and profit fell to HKD 561m ($72.3m).
Playing the primary villain in SJM’s tale of woe was VIP gaming revenue, which fell 29.2% to HKD 5.6b. SJM operated an average of 369 VIP tables in Q1, down from 530 in the same period last year.
Mass market gaming revenue fared slightly better, falling 15% to HKD 5.1b, despite the number of mass tables rising from 1,209 to 1,298. Slots revenue was down 14.3% to HKD 267m, while total non-gaming revenue was a mere HKD 132m, down 16.5%.
SJM’s declines were more pronounced than those suffered by the broader Macau market in Q1, which saw VIP gaming down 19.3% and mass market gaming off 4.8%.
SJM’s declines also stand in stark contrast to the only other Macau-only casino operator, Galaxy Entertainment Group (GEG), which reported overall revenue falling just 2% in Q1, while posting its first quarterly profit rise since 2014.
Of course, GEG got a boost from last year’s opening of Phase Two of its flagship Galaxy Macau property. SJM’s peninsula-located venues are among the oldest in Macau and its first ever property on Cotai – the Lisboa Palace – isn’t expected to open until Q4 2017.
By the time the Lisboa Palace opens its doors, all five of the other Macau operators will have debuted flashy new Cotai properties in the previous 18 months. Meanwhile, SJM can only watch the erosion of its gaming revenue market share, which fell from 22.7% in Q1 2015 to 20.2% in the most recent quarter.
SJM’s current flagship property, the Grand Lisboa, reported that its hotel saw occupancy rise to 91.6% in Q1 from just 81.4% the previous year. However, SJM only managed to achieve this turnaround by slashing the average room rate from HKD 2,509 per night to HKD 1,660.
On the plus side, the company maintains a muscular balance sheet, with cash and equivalents of nearly HKD 17b on hand versus just HKD 676m in debt.