SJM’s mass market tables outperform VIP

sjm-holdings-macau-mass-market-vipMacau casino operator SJM Holdings reported profits falling nearly two-fifths as the market’s VIP gambler drought shows no sign of abating.

In the six months ending June 30, SJM reported revenue falling 20.6% to HKD 21.1b (US $2.7b), while earnings were down nearly 28% to HKD 1.6b and profit fell nearly 39% to HKD 1.1b.

The gaming revenue numbers were uniformly negative, with mass market table games down 11.5%, slot machine revenue down 8.3% and VIP gaming down 28.5%.

SJM’s overall market share fell 2.3 points to 20% in H1, while its share of the VIP market fell 2.8 points to 18.4%. SJM’s average number of VIP tables in action during H1 fell 29.4% to 361 while its mass tables increased by 6.5% to 1,301.

The VIP decline allowed mass market revenue to assume the dominant position, albeit just barely. Mass market table revenue came to HKD 10.179b, just a hair above the HKD 10.167b generated by VIP tables. Counting slots’ HKD 537m, mass market gaming accounted for 51.3% of SJM’s overall H1 revenue, while VIP gaming saw its share fall five points to 43.7%.

On the plus side, the total sum of advances SJM made to either junket operators or directly to VIP gamblers during H1 fell nearly 20% year-on-year and none of these advances are past due or impaired.

While SJM is Macau’s largest casino operator in terms of the number of venues operating under its license, its properties are entirely tied to Macau’s peninsula. The company said that its in-development Grand Lisboa Palace, which will be SJM’s first property on Cotai when it opens in H2 2017, made “good progress” toward completion in H1 2016.

SJM has long relied on its VIP gambling operations but the Grand Lisboa Palace will be an unabashed bid for mass market acceptance. Over 90% of the property’s total area will be devoted to non-gaming amenities, including three hotel towers totalling 2k rooms, and an array of shopping, dining and entertainment options.