Macau casino operator SJM Holdings continues to do more with less as its third-quarter profits rose despite falling revenue.
On Tuesday, the Hong Kong-listed SJM released key performance indicators for the three months ending September 30, during which its net gaming revenue totaled HK$8.06b (US$1.03b), a 3.2% decline from the same period last year, while adjusted earnings improved 3.4% to HK$950m and profit rose 4.5% to HK$738m.
That revenue/profit disparity was even sharper at SJM’s flagship Casino Grand Lisboa, where gaming revenue was down by one-third to HK$2.8b but the property’s earnings gained 5.7% to HK$524m.
SJM’s results reflected the divergent fortunes of its VIP and mass market gaming segments, which largely mirrored the overall Macau casino market trends during Q3. SJM’s VIP gaming turnover was down 44% and VIP revenue slid 42.6% to HK$2.89b, but this also meant SJM paid 45.2% less commissions to VIP gaming promoters.
The higher-margin mass market tables reported revenue rising 12.1% to HK$6.3b, while slot machine revenue nudged up 4.6% to HK$298m. SJM’s average number of VIP tables in operation during Q3 fell by five to 286 while mass market tables rose by nearly 100 to 1,503 and slots dipped by 74 to 2,563.
For the first nine months of 2019, SJM’s gaming revenue is down 1.5% year-on-year to HK$25.3b but earnings are up 5.2% to HK$3b and profit rose 9.6% to HK$2.4b.
SJM remains the only one of Macau’s six casino concessionaires to lack a functioning venue in the flashier Cotai region, but the company said Tuesday that construction of its $4.6b Grand Lisboa Palace is “nearing completion” and the mandatory pre-operating government inspections are expected to begin “shortly.”
Development of the Grand Lisboa Palace has been plagued by numerous setbacks, but SJM aims to finish construction by the end of this year. The company is less certain regarding the property’s actual grand opening, which is currently scheduled for some time in H2 2020, although some analysts believe this could extend to January 2021.
