Macau casino operator SJM Holdings Ltd said profit attributable to owners of the company fell by 16.4 percent year-on-year to HKD1.53 billion (US$197.3 million) in the third quarter. For the nine months to September 30 it slipped 4 percent to HKD5.43 billion, it said in a filing on Monday to the Hong Kong Stock Exchange.
Most other indicators also showed a year-on-year retreat in performance. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of the group in the third quarter decreased by 14.3 percent year-on-year to HKD1.75 billion. For the nine months ended September 30, EBITDA declined 1.8 percent to approximately HKD6.20 billion compared to a year earlier.
Adjusted EBITDA margin for SJM Holdings in the three months to September 30 was 9.6 percent, the same margin as in the third quarter 2013. For the first nine months of 2014, EBITDA margin was 9.9 percent, the same as for the first nine months of 2013.
Group wide, gaming revenue in the third quarter decreased by 14.1 percent year-on-year to HKD18.09 billion. For the nine months ended September 30, it decreased by 1.6 percent year-on-year to HKD62.20 billion.
Gaming revenue for SJM’s flagship Casino Grand Lisboa (pictured) decreased by 11 percent year-on-year in 3Q to HKD6.88 billion. The property’s adjusted EBITDA decreased by 6.4 percent to HKD999 million in that period. For the nine months ended September 30, Casino Grand Lisboa’s gaming revenue decreased by 0.3 percent from the prior-year period, to just under HKD23.09 billion, whilst its adjusted EBITDA increased by 1.9 percent to HKD3.42 billion.
SJM results were 3 percent below consensus, UBS AG said in a note on Monday. “Group wide business volumes were largely in line across segments, but the lower margin businesses at third party casinos did better than expected, while operations at self owned properties – especially at [the] old Lisboa – were weaker than expected,” the UBS analysts wrote.
SJM management described October “as an ‘anomaly’ for the market and indicated the November trends at the wholly-owned properties have stabilised,” Japanese finance house Nomura said in a note on Monday. The casino operator also confirmed it had no table reclassification in October and has no plans to reclassify tables, the note added.
SJM’s group gaming revenues accounted for 22.5 percent of Macau’s casino gaming market during the third quarter of 2014, as compared with 24.3 percent in the prior-year period, the company said. The firm had a 23.2 percent market share for the nine months to September 30, compared with 25.0 percent for the first nine months of 2013, it added.
But the company stressed that the group had “maintained a strong and liquid financial position” with HKD24.59 billion of cash and HKD1.09 billion of debt as at September 2014.
Construction of the HKD30-billion Lisboa Palace on Cotai is on schedule with piling work set “to be completed by November”, said a note from Wells Fargo Securities LLC. SJM still expects the Cotai project to open in 2017.
(Updated at 10.07am, November 11)
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Kwok Chi Chung
President of junket trade body, the Macau Association of Gaming and Entertainment Promoters