Macau casino operator SJM Holdings Ltd announced on Tuesday that company profit for full year 2015 declined 63.4 percent in year-on-year terms to HKD2.47 billion (US$317.9 million).
The company said in a filing to the Hong Kong Stock Exchange that profit was impacted by an impairment loss on available-for-sale investment in equity securities and on impact on profit related to the temporary closure of satellite casino Greek Mythology at the end of 2015. Without these, SJM Holdings would have reported a profit decline of 57.5 percent, the firm added.
SJM Holdings recorded annual adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD3.86 billion, a decrease of 50.3 percent from 2014.
Gaming revenue was HKD48.59 billion for the 12 months ended December 31, 2015, representing a decline of 38.7 percent from the previous year. VIP gaming revenue slumped by 48 percent year-on-year in 2015 to HKD25.06 billion; mass table gaming revenue was down by 24.6 percent to HKD22.39 billion. Slot machine and other gaming revenues also posted an annual decline.
Market wide casino gross gaming revenue (GGR) in Macau declined 34.3 percent in 2015 compared to the previous year, according to official data. That included a 39.9 percent decline in market wide VIP gaming revenue and a 26.7 percent decrease in mass market table gaming revenue.
SJM Holdings stated it had a 21.7 percent share of Macau’s gaming market last year, down 1.5 percentage points from 2014. The firm reportedly had a 25.3 percent share of the city’s 2015 table mass market and 20.2 percent of the VIP segment, it said in Tuesday’s filing.
Grand Lisboa to undergo revamp
SJM Holdings’ flagship Grand Lisboa casino hotel (pictured) reported a 44.1 percent year-on-year decrease in gaming revenue in 2015 to HKD16.54 billion.
The firm will begin next month renovation work to “update” the property’s ground floor. When completed by the end of the year, the area will accommodate an additional five tables and 31 slot machines, plus new retail space, according to SJM Holdings.
The firm’s 14 satellite (third party-promoted) casinos generated annual gaming revenue of HKD25.49 billion, down 35.9 percent from 2014. Profit attributable to SJM Holdings from those operations amounted to HKD640 million last year, a year-on-year decline of 61.3 percent.
Following the suspension of operations at casino Greek Mythology, SJM Holdings stated on Tuesday it would allocate the casino’s 79 gaming tables to the firm’s self-promoted casinos pending Greek Mythology’s reopening after renovation.
SJM Holdings also reported a 38.1-percent year-on-year slump in non-gaming revenue for 2015 to HKD601 million.
The company said construction work for its new casino resort, located in Macau’s Cotai district, “made substantial progress in 2015” and was on track for completion around the end of 2017. Earlier this month, the firm announced that the HKD30-billion scheme was to be branded Grand Lisboa Palace. It previously had the working title ‘Lisboa Palace’.
SJM Holdings said that its capital commitments in connection with the Grand Lisboa Palace project amounted to a total value of HKD24.1 billion as of the end of last year. The firm added it was in discussion with commercial banks concerning arrangement of banking facilities to finance the project. The gaming operator expected to conclude these arrangements “later this year”.
Meanwhile, SJM Holdings aims to reopen the Casino Jai Alai in the Macau peninsula “later in 2016”. Renovation work on the property had been suspended since February 2014 pending government approvals and was restarted in May 2015. Once reopened, the facility will have new facilities including a hotel with 130 rooms, restaurants and shops.
SJM Holdings added it would “remain focused principally on Macau, while selectively considering opportunities for future expansion in the Asian region.”
The firm stated: “Whilst it is not clear how long the conditions which inhibited gaming revenue growth [in Macau] during the past two years will continue, the group remains optimistic about its future prospects, given the potential for growth of visitation and spending in Macau, infrastructure developments that improve access to Macau, the general prosperity of the Asian region, the group’s strategically located network of casinos and its strong balance sheet.”
The board of SJM Holdings proposed a final dividend of HKD0.15 per share, subject to shareholder approval.
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Analyst at Roth Capital Partners