SJM profit down 46.6 percent in 15Q1

Monday 4th of May 2015

SJM reported that profit attributable to owners in Q1 2015 decreased 46.5 percent to HK$1 billion ($128.9 million) compared with the same period last year, caused by a steep drop in gaming revenue.

The company’s gaming revenue in Q1 decreased by 37.3, while adjusted EBITDA for the company decreased 43.3 percent.

SJM, which operates 18 casinos and two hotels, said its gaming revenue accounted for 22.7 percent of Macau’s casino gaming revenue during Q1, compared with 23 percent in Q1 2014.

The group’s VIP gaming revenue was HK$7.9 billion, a year-on-year decrease of 45.4 percent. Mass market gaming revenue fell 23.9 percent to HK$6 billion.

UBS said in a note that the performance of SJM’s flagship Grand Lisboa property was weak relative to the industry, with VIP volumes down 35 percent quarter-on-quarter and mass down 12 percent QoQ.

“We note that hotel occupancy at Grand Lisboa was at 81% in Q115 (96% in Q114), which is low even considering rooms out for renovation: this reflects weak junket VIP demand at the property, but also a lack of initiative to re-allocate rooms to the mass database, unlike its peers on the Peninsula,” said analyst Anthony Wong, adding that the company’s management paints a “murky” outlook.

“While management continues to hope for some recovery in H2; the pace of junket closures have not accelerated in recent months though volumes remained weak.”

UBS said SJM has also obtained approval to restart renovation on the former Casino Jai Alai premises.

“[The] company has finally obtained the approval for Jai Alai renovations (construction stalled since mid-2014), with construction re-started recently and management guides a HK$1bn budget on the 130 rooms / 45 tables project, to be opened in 2016.”

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