SJM Holdings Ltd had committed as of June 30 to spending HKD27.34 billion (US$3.5 billion) on the Lisboa Palace casino resort project on Cotai, the company said in its interim report on Monday. That is a pledge equal to 91 percent of the stated budget. The venue is not due to be completed until 2017.
The company – founded by Stanley Ho Hung Sun – stated in February it was increasing the budget for the scheme to HKD30 billion from a previous estimate of HKD25 billion, due to a rise in costs for materials and labour. The budget has risen by 50 percent from the time its Cotai venue was first mooted as a HKD20 billion scheme in 2011.
In June, Hong Kong’s The Standard newspaper reported that the company’s chief executive Ambrose So Shu Fai was concerned the budget might rise beyond HKD30 billion.
SJM is developing on its Cotai land – gazetted in May 2013 – a complex with a gross floor area of 521,435 square metres (5.6 million sq feet) plus 77,158 sq ms parking area. Lisboa Palace (pictured in an artist’s rendering) will have three hotels with a total of approximately 2,000 rooms, facilities for shopping, dining, entertainment, and a casino with approximately 700 tables and 1,000 slot machines “subject to the obtaining of applicable licences”, said the company in its Monday filing.
The firm is the last of the six Macau operators to develop a resort on the mass-market focused Cotai casino zone. Ground breaking began on February 13.
China’s mass market and its enthusiastic middle-income shoppers are likely to be increasingly important to Macau gaming operators. Demand from such consumers is less susceptible than is VIP gambling business to corruption crackdowns on the mainland, say some investment analysts.
According to publicly available data compiled by GGRAsia, SJM Holdings had – among the Macau operators – the lowest amount of non-gaming revenue as a percentage of all revenue during the first half of this year, at 0.8 percent.
SJM Holdings reported a profit of HKD3.9 billion for the first six months of 2014, an increase of 1.9 percent compared to a year ago. Growth slowed from 12.2 percent for the same period last year.
The company added in its interim report it expects the under-renovation Jai Alai Palace building – which included a casino and leisure complex at the time of its closure on February 28, 2013 – will reopen in 2015 with “new facilities including a hotel with approximately 130 rooms, restaurants and retail shops (to be operated by other service providers) …”
In November last year, a company filing said Casino Jai Alai would be leased by SJM Holdings from Angela Leong On Kei – fourth consort of Mr Ho – for three years from January 2014.
As of 30 June 2014, SJM Holdings had entered into capital commitments in connection with the Jai Alai Palace renovation project to a total value of approximately HKD720 million, said Monday’s filing.
SJM Holdings operated a total of 1,195 mass market gaming tables in its casinos as of June 30, compared with 1,210 mass market gaming tables as of December 31, 2013, said the latest report to the Hong Kong Stock Exchange.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia