SJM Holdings Ltd dropped in Hong Kong trading today after posting first-quarter earnings that missed analyst estimates. SJM Holdings fell 2.39 percent to close at HK$20.40 (US$2.63), the lowest since September 18.
On Monday, the casino operator founded by Stanley Ho Hung Sun said total gaming revenue grew by 4.9 percent to HK$22.8 billion in the three months ended March 31. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 3 percent to HK$2.2 billion, SJM Holdings said in a Hong Kong Stock Exchange statement.
The company said VIP gaming revenue in the first quarter fell 4 percent year-on-year to HK$14.5 billion, while that from the mass market increased 27.8 percent to HK$7.9 billion.
While first quarter EBITDA missed analyst estimates, “gaming volumes generally appeared to remain solid,” Union Gaming Research Macau Ltd wrote today in a note.
“But for notably lower year-on-year VIP win rate, we believe that revenue and EBITDA would likely have demonstrated growth in the low teens,” the research house added.
Gambling revenue in Macau rose 20 percent to 102.2 billion patacas (US$12.8 billion) in the first quarter.
The operator’s performance in the second half should be helped by a move to dedicate more tables to premium-mass gamblers, who place bigger stakes than junkets.
“With its recent success in maximising table yield by reallocating premium mass tables, SJM is adding another premium mass area at Grand Lisboa with 14-16 tables in 4Q14,” Telsey Advisory Group wrote in a report.
SJM Holdings in February broke ground on its first resort in Cotai Strip. The HK$30 billion Lisboa Palace is scheduled to open in 2017.
“While development of our Cotai project is underway, we strive for further growth in gaming revenue, particularly in mass gaming, as well as improving operating efficiency of our existing properties,” Ambrose So Shu Fai, chief executive of SJM Holdings, said in the statement.
However, the operator indicated construction on the Jai Alai renovation has been temporarily suspended as the company awaits its final regulatory approvals. Despite the setback, the new Jai Alai is expected to re-open on time in early 2015, Telsey Advisory Group said.
SJM Holdings also dismissed concerns over an impact on its gaming volumes from the crackdown on unregistered China UnionPay mobile devices. UnionPay has stepped up control measures to fight the use of bogus transactions to circumvent mainland China’s strict currency-export controls.
The company also said it is not seeing signs of weakness on VIP or mass market, nor do they expect issues like the transit visa tightening to have a material impact on business. “We would agree, and all signs continue to suggest that Macau fundamentals remain quite strong,” Union Gaming said.
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”Assuming that our [Tigre de Cristal] phase two project and the other future operators’ development plans remain on track, we may see the benefits of a ‘cluster’ effect [in the Primorye Integrated Entertainment Zone] as early as 2021”
Summit Ascent, lead developer of Tigre de Cristal