Macau’s original casino operator SJM Holdings continues to lag its newer competitors, reporting a double-digit decline in third-quarter profits.
Tuesday saw SJM release its unaudited earnings report for the three months ending September 30, during which gaming revenue was essentially flat at HKD 10b (US $1.28b), while adjusted earnings fell 10.4% to HKD 726m ($93.1m) and profit slipped 16.5% to HKD 428m.
Things look equally limp on the year-to-date front, with gaming revenue falling 1.2%, earnings off 8.6% and profits down 14%. Fortunately, the company remains flush, with HKD 13.5b in cash, bank balances and pledged bank deposits versus only HKD 4.4b of debt.
The Q3 shortcomings can’t be pinned on the company’s flagship property, the Casino Grand Lisboa, which reported gaming revenue up nearly one-fifth to HKD 3.7b, although the property’s earnings were up a more modest 2% to HKD 418m.
Like other Macau operators, SJM has enjoyed the return of VIP gamblers following the (apparent) end of Beijing’s two-year-plus corruption crackdown. Overall VIP revenue at SJM properties was up 7.4% to HKD 4.4b in Q3, although this was largely due to a higher than usual win rate. VIP turnover suffered a slight decline, just as the average number of VIP tables in action at SJM properties fell to 290 from the 323 in action during Q3 2016.
By contrast, SJM’s mass market revenue declined 4.6% to HKD 5b, while slots and Tombola revenue fell 7.7% to HKD 251m.
Rather than dwell on the dismal year-on-year comparisons, SJM CEO Ambrose So chose to focus on the sequential-quarter gains in revenue, earnings and profits, which he said looked even better considering the disruption from Typhoon Hato, which blew through the special administrative region in August.
GRAND LISBOA PALACE RACING TO FINISH LINE
So said SJM was still assessing the full impact of the Hato-related delays in finishing construction of its Grand Lisboa Palace resort casino, which will be SJM’s first property in the Cotai region. MGM China recently confirmed that Hato-related repairs would delay the launch of its new MGM Cotai property.
Hato is but the latest setback for the Grand Lisboa Palace, following a fatal workplace accident in June and two fires, including the latest in September that Macau’s Judiciary Police suggested was likely deliberately set.
According to SJM, the Grand Lisboa Palace is scheduled to open sometime in H1 2018, but some analysts have suggested early 2019 now appears more likely. Following the most recent fire, SJM executive director Angela Leong On Kei suggested delays were “inevitable” and could lead to a phased opening of the property. SJM’s Q3 update said only that work was progressing at “full speed.”
