Management of Macau casino operator SJM Holdings Ltd is said to have mentioned on a conference call with analysts on Tuesday that its Grand Lisboa Palace (pictured in a file photo) was now expected to open only in the second half of 2020.
The call followed the release of the company’s first-half earnings report, which flagged an 8.3 percent increase in the estimated cost for the Cotai project, to HKD39 billion (nearly US$5 billion). That compares with a HKD36-billion figure previously associated with the project.
SJM Holdings said the upped budget included “increased costs related to the project’s revised completion date”. It had been reported last week the group was seeking permission from lenders to push back the permissible completion date on Grand Lisboa Palace to March 2020, and the permissible opening date to year-end 2020.
Brokerage JP Morgan Securities (Asia Pacific) Ltd pointed out that the delay to the Grand Lisboa Palace was “not unexpected”.
“Management [of SJM Holdings] further explained during the call that: it’ll try to finish construction by August/September 2019, which in turn implies property can open in the second half of 2020 given about a year needed to get necessary inspection and approvals for hotel/casino operations,” wrote analysts DS Kim, Jeremy An and Christine Wang in a Tuesday memo.
They added: “We now model Grand Lisboa Palace to open by September 2020 (previously March 2020), but we wouldn’t be surprised if it’s delayed a bit more given its history of project delays (recall, this is the fifth delay from original 2017 opening target).”
Brokerage Sanford C. Bernstein Ltd also mentioned a second-half 2020 opening for Grand Lisboa palace, adding that SJM Holdings “is still suffering” from the lack of presence in Cotai, as it continues to lose share in the Macau market on a year-on-year basis.
“As we have expected, the construction of… Grand Lisboa Palace is now scheduled to complete in second-half 2019 and property opening will be delayed to 2020,” said Sanford Bernstein in its Tuesday note.
SJM Holdings’ first-half profit rose 12.1 percent year-on-year on total group-wide revenue and gaming revenue that actually fell slightly. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the period rose by 6.1 percent year-on-year, to nearly HKD2.08 billion.
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”China has been strengthening the control over capital flow, and the impact of that has already been reflected [on Macau’s gaming revenue trend]. There should not be any bigger impact from the new… legislation [on the mainland] … on the gaming revenue trend here”
Wilfred Wong Ying Wai
President of Macau casino operator Sands China