Macau casino operator SJM Holdings Ltd moved into first-quarter profit of HKD31 million (US$4.0 million), compared to a HKD74-million loss a year earlier.
That was on total net revenue that rose 8.1 percent year-on-year, to HKD7.48 billion.
Gaming net revenue went up 7.5 percent year-on-year, to nearly HKD6.95 billion.
The gaming performance was supported by a 41.1 percent year-on-year gain in gross gaming revenue (GGR) at the group’s Cotai resort, Grand Lisboa Palace (pictured), to nearly HKD1.57 billion.
The company – which is only required under Hong Kong Stock Exchange rules to make formal earnings reports on a six-monthly basis – released on Tuesday unaudited selected highlights from its trading for the three months to March 31.
A separate release on Tuesday cited SJM Holdings’ chairman, Daisy Ho Chiu Fung, as saying: “While the market experienced softer consumer spending in the first quarter, SJM Holdings’ performance remained steady on a sequential basis.”
She added: “The property enhancements undertaken throughout 2024 are now coming to fruition, with a pipeline of new offerings set to launch in phases – serving as growth levers for the mass market. Although the near-term macroeconomic outlook presents some headwinds, we remain focused on execution and confident in the long-term fundamentals of Macau’s tourism economy.”
Vitaly Umansky, senior analyst at Seaport Research Partners, wrote in a Tuesday note following the first-quarter highlights being issued: “SJM seems to be taking some market share in the lower end of base mass (especially the day tripper market) as other operators have been overly focused on premium play.
“In the short term this may benefit SJM, but we see other operators looking to expand base mass positioning in the next few quarters.”
SJM Holdings’ first-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 10.9 percent year-on-year to HKD958 million.
During the period reported, the group’s GGR from rolling chip business, i.e., VIP play, was HKD641 million, a decrease of 0.6 percent year-on-year.
Mass-market table game GGR was HKD6.20 billion, up 8.6 percent year-on-year.
Electronic game GGR was HKD707 million, a 32.1-percent improvement.
Grand Lisboa Palace’s total first-quarter revenue was just over HKD1.93 billion, up 36.2 percent year-on-year.
The property’s adjusted EBITDA was HKD149 million, up 69.3 percent from the prior-year period.
Grand Lisboa Palace ‘slow ramp’
Seaport’s Mr Umansky stated, commenting on Grand Lisboa Palace’s market share of Macau GGR: “While the property continues to ramp up, the ramp is very slow, with Grand Lisboa Palace achieving only 2.8 percent market share, (versus 2.7 percent in the fourth quarter and 2.6 percent in the third quarter.)”
The analyst further noted, referring latterly to the HKD39-billion investment made by SJM Holdings in its Cotai property: “While Grand Lisboa Palace will continue to ramp as it adds new non-gaming amenities and focuses more on premium mass, the return on investment remains abysmally low and unlikely to achieve anything approaching positive value creation (versus cost of investment) in the foreseeable future (if at all).”
At SJM Holdings’ downtown Macau flagship property, Grand Lisboa, casino GGR was down 4.4 percent year-on-year, to just over HKD1.79 billion. Total revenue there was down 3.6 percent, to just below HKD1.89 billion.
First-quarter adjusted EBITDA at Grand Lisboa was down 17.8 percent, at HKD440 million.
The group had just over HKD3.23 billion of cash, bank balances, short-term bank deposits and pledged bank deposits. It had just below HKD26.74 billion of debt as of March 31.
SJM Holdings’ existing syndicated banking facilities consist of a HKD9-billion term loan and a HKD10-billion revolving credit facility, of which HKD3.8-billion was undrawn as of March 31, the company said in its Tuesday filing.
(Updated 9.12am, April 30)
