SJM Holdings Ltd. is flying like an eagle. Its profits soared last year, climbing 45.2% year-on-year and reaching $363.1 million. SJM was able to improve its bottom line by streamlining some of its internal operations and by reducing marketing and promotional expenses. Despite the overall success, total net gaming revenue only increased to $4.291 billion for an improvement of 8.3% over the previous year. 97.9% of the company’s aggregate revenue comes from gaming revenue.
Total revenue for last year of $44.384 billion was reported by the company, also an increase of 8.3% year-on-year. Its EBITDA (earnings before interest, tax, depreciation and amortization) jumped 21.1% over 2017 to reach $473.99 million. The adjusted EBITDA margin climbed 10.8% from 2017 to 2018 compared to the 9.7% seen in the previous two-year period.
VIP gross gaming revenue (GGR) dropped slightly year-on-year, falling 1.1% to $2.50 billion. Mass table GGR increased 12.1% to $2.94 billion, while revenue from slot machines and other gaming operations increased 12.6% to around $147.8 million.
VIP gross gaming accounted for under 44.8% of the total GGR for the company last year. In 2017, it accounted for 47.9% of the overall GGR and this marks a trend that is seeing many operators focus on mass-market gaming while still massaging their VIP feeder markets.
SJM stated that its Macau performance reflects a 14.9% share of the market. This includes a 19.5% share of mass-market table gaming revenue, as well as 12.2% of VIP gaming revenue.
In response to the company’s filing, Grant Govertsen of Union Gaming released his analysis on SJM, stating, “While the company grew portfolio-wide mass in the high single digits and within striking distance of the market-wide growth rate, VIP continues to underperform the market (with the underperformance accelerating in the fourth quarter 2018).”
Govertsen continued, “Ultimately we attribute this to the widening gulf between the peninsula and Cotai with VIP customers, all other things being equal, exhibiting a flight to quality and patronising new properties and/or new/refurbished VIP rooms on Cotai.”
In a separate press release, SJM said that its construction of the new Grand Lisboa Palace in Cotai is expected to be completed during the first half of this year and that operations would begin “as soon as possible thereafter.” The resort has suffered from a number of delays that have caused the launch to be postponed and many analysts have said that it won’t be ready until next year.
Analysts with the Sanford C. Bernstein brokerage offered their position on the Grand Lisboa, stating, “On Grand Lisboa Palace, management is confident that the construction will be completed by June 2019 and opening date will depend on when it receives government approvals. The process normally takes five to six months per management, but we think it could take longer.”
