GGRAsia – Grand Lisboa Palace launch now 1Q 2021: SJM

Grand Lisboa Palace launch now 1Q 2021: SJM

Oct 29, 2020 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd says it now “anticipates” opening its Cotai resort Grand Lisboa Palace (pictured) “during the first quarter of 2021”. Previously the firm had mentioned it opening by “the end of 2020”.

The information was given in the group’s third-quarter earnings, released to the Hong Kong Stock Exchange on Thursday.

“Construction work on the Grand Lisboa Palace has been completed and the group is awaiting the assignment by local government authorities of final inspection dates, which are expected in November 2020,” SJM Holdings told the bourse.

Its filing added: “The group anticipates opening the project during the first quarter of 2021.”

SJM Holdings had a third-quarter loss of HKD1.03 billion (US$133.0 million), amid adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) that were negative by HKD782 million.

In the same quarter a year earlier, the firm had made a HKD738-million profit. Adjusted EBITDA in the third quarter of 2019 stood at HKD950 million.

For the first nine months of 2020, adjusted EBITDA was negative by HKD1.77 billion, compared with a positive result of nearly HKD3.03 billion a year earlier.

The group’s net gaming revenue – i.e., gross gaming revenue (GGR) minus commissions and incentives – was HKD841 million in the three months to September 30, down 89.6 percent year-on-year.

The quarterly numbers had been “impacted by the severe contraction in tourism caused by the Covid-19 pandemic,” said Ambrose So Shu Fai, SJM Holdings’ vice-chairman and chief executive, in prepared remarks in a press release issued along with the results.

But the CEO added: “Around the end of the quarter… we saw the beginnings of recovery” in visitor numbers, “hotel occupancy and visitor spending”.

The October trend for gaming operations was “’encouraging’, as per management,” commentary following the third-quarter results, said JP Morgan Securities (Asia Pacific) Ltd in a Thursday memo.

SJM Holdings’ GGR “fell 79 percent year-on-year during the Golden Week,” stated analysts DS Kim, Derek Choi and Jeremy An, citing guidance from management, and referring to a Chinese holiday at the start of October. The JP Morgan team additionally wrote: “The trend has since improved gradually yet clearly (no numbers were given), with more players coming back given improved awareness and word-of-mouth.”

The third-quarter occupancy rate at the group’s current flagship property, Grand Lisboa Hotel on Macau peninsula, was 5.3 percent. The average room rate was HKD1,695 per night, as compared with an average occupancy rate of 91.3 percent and average room rate of HKD1,516 per night in third-quarter 2019.

Mr So nonetheless stated: “Beginning in 2021 our role in diversified tourism development will be further enhanced by our spectacular new resort, the Grand Lisboa Palace.”

3Q gaming numbers

Third-quarter GGR at Casino Grand Lisboa was HKD176 million, a year-on-year decrease of 93.7 percent.

Casino Grand Lisboa’s adjusted EBITDA was negative by HKD336 million, an adjusted-EBITDA decline of 164.1 percent.

SJM Holdings’ existing self-promoted casinos are: Casino Grand Lisboa at Grand Lisboa; Casino Lisboa inside Hotel Lisboa; Casino Oceanus at Jai Alai; Casino Eastern next to Hotel Grand Lapa, and Casino Taipa.

The group’s third-quarter VIP GGR was HKD200 million, a decrease of 93.1 percent from HKD2.89 billion in third-quarter 2019.

Mass-market GGR for the three months to September 30 was HKD690 million, down 89.1 percent from nearly HKD6.31 billion a year earlier. Third-quarter slot machine GGR was HKD57 million, a decrease of 80.8 percent from HKD298 million in third-quarter 2019.

Total VIP chip sales for the group during third-quarter 2020 were HKD4.1 billion, versus HKD93.0 billion a year earlier. The latest quarter’s VIP gaming hold percentage – before commissions and discounts – was 4.89 percent, versus 3.10 percent a year before.

During the third quarter this year, SJM Holdings operated an average of 180 VIP gaming tables. That was 37.1 percent fewer than the 286 run on average in the same quarter a year before.

The group ran on average 832 mass-market gaming tables in the three months to September 30, which was 44.6 percent fewer than the 1,503 in use a year earlier.

SJM Holdings operated 1,109 slot machines on average in the latest reporting period, a decline of 56.7 percent on the 2,563 machines in the equivalent quarter in 2019.

Macau casino operators have in any case been instructed to operate with some reduction in gaming floor capacity – independent of consumer demand – as part of local countermeasures against Covid-19.

Analysts Vitaly Umansky, Kelsey Zhu and Tianjiao Yu of brokerage Sanford C. Bernstein Ltd, said in a Thursday note, that SJM Holdings’ overall GGR market share was “20 percent in the third quarter, down from 30 percent” in the second quarter.

“Macau-locals business was impacted negatively compared to the second quarter, as Covid[-19] test requirements for entry into casinos were introduced during the quarter,” the analysts stated.

But they added: “SJM’s share is still at a higher level compared to 14 percent historical market share, as local business and day trippers from Guangdong made up a larger-than-normal share of business in Macau in the third quarter.”

Capital expenditure of the group during the latest reporting period was HKD925 million, “primarily for construction in progress and furniture, fixtures and equipment”.

The group had just under HKD5.94 billion in cash, bank balances and pledged bank deposits and just over HKD16.78 billion of debt as of September 30.

The firm had – as of the end of the reporting period – a revolving credit facility of HKD10-billion, of which HKD8.5 billion was undrawn at the close of September.

(Updated 10.30am, Oct 30)