SJM Holdings’ revenue falls, earnings rise on fewer VIP freebies


sjm-holdings-earnings-rise-vip-gambling-freebiesMacau casino operator SJM Holdings saw revenue fall but profits rise in 2019, as the market-wide VIP gambling slump led to reduced payments to junket operators.

Figures released Monday show SJM’s net gaming revenue hit HK$33.2b (US$4.27b) in 2019, a 1.5% fall from 2018’s total. But SJM’s adjusted earnings for the year rose 13.2% to HK$4.2b and profit attributable to SJM’s owners was up 12.5% to HK$3.2b.

SJM’s VIP gambling revenue was down 30.4% year-on-year to HK$13.7b, pushing the VIP share of SJM’s overall gaming revenue down more than 10 points to 34.2%. VIP turnover was up 37.4% but VIP hold was up more than a quarter-point to 3.26%, above the 2.7-3.0% expected win range.

Also helping to offset the VIP segment’s decline was a significant decline in commissions and incentives last year. The VIP freebies were down by one-third year-on-year to HK$6.84b.

In contrast, mass market table gaming revenue was up 8.9% to HK$25.1b, representing 62.8% of overall gaming revenue, up more than 10 points year-on-year. SJM had 1,511 mass tables at the end of 2019, up from 1,425 at the end of 2018. SJM’s slot machine revenue rose 2.5% to HK$1.2b.

SJM’s flagship Casino Grand Lisboa property’s results were more polarized than the company’s overall performance, with revenue falling 17.6% to HK$12.9b while earnings rose 17.3% to HK$2.2b.

SJM’s other ‘self-promoted’ casinos saw revenue nudge up 0.7% to HK$6.3b and earnings jump 37.3% to HK$1.2b, while the 16 ‘third-party promoted’ casinos operating under SJM’s license saw revenue fall 5.4% to HK$20.8b and earnings dropped nearly one-fifth to HK$522m.

SJM said its share of the overall Macau casino market was 14.1% in 2019, down 0.7 points from 2018’s figure. SJM’s share of the VIP market was down 1.8 points to 10.4% while mass share fell from 19.5% to 18.2%.

SJM announced that its in-development Grand Lisboa Palace property on Cotai had been completed “in late 2019” and the company has filed the necessary applications with an eye to open the Palace doors sometime in the second half of this year. SJM remains the only one of Macau’s six casino concessionaires that has yet to launch a property on Cotai.

The new Palace will presumably allow SJM to smooth out the rough patches in its 2020 financials caused by February’s coronavirus-related 15-day shutdown of all Macau gaming operations. SJM noted that travel restrictions imposed as a result of the crisis had “drained Macau of visitors,” which will have a material effect on SJM’s performance in H1 “and potentially beyond.”