SJM posts worse-than-expected net profit in 16H1

Sunday 7th of August 2016

Macau casino operator SJM Holdings posted worse-than-expected net profit for the first half of 2016, as the market continues to shift towards Cotai.

Adjusted EBITDA went down 27.8 percent to HK1.6 billion, falling short of analyst estimates of HK$1.7 billion.

Total revenue declined 20.6 percent year-on-year to HK$21.1 billion.

“The group’s performance in the second half of 2016 will remain susceptible to the overall economic performance of the surrounding region, government regulatory policies... as well as to the competitive situation among the casino operators in Macau,” said the company in a statement.

In an interview with the South China Morning Post before the release of its earnings, UOB Kay Hian analyst said that SJM is seeing a shrinking of its market share as Cotai is becoming a top destination for tourists instead of the Macau Peninsula, where SJM’s casino and hotel operations are currently located.

“In addition, its flagship VIP room business is likely to be hammered by tightening regulations on junket operations,” she said.

According to the results, SJM’s VIP-room gaming revenue declined 28.5 percent year-on-year to HK$10.2 billion, while mass market tables went down 11.5 percent to HK$10.2 billion.

In May, SJM reported better-than-expected results in 16Q1 with profit attributable to owners of the company down 44.1 percent to HK$561 million, while adjusted EBITDA dropped by 32.5 percent to HK$838 million.