GGRAsia – SJM quarterly loss near double y-o-y in 1Q to US$163mln

SJM quarterly loss near double y-o-y in 1Q to US$163mln

May 03, 2022 Newsdesk Latest News, Macau, Top of the deck

The first-quarter loss at Macau casino operator SJM Holdings Ltd rose 97.8 percent year-on-year, to HKD1.28 billion (US$163.4 million), versus a HKD647-million loss in the first three months of 2021.

First-quarter 2022 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) widened to negative HKD474 million, versus negative HKD319 million in the same period a year earlier, the firm said in unaudited highlights filed with the Hong Kong Stock Exchange on Tuesday.

“Inbound tourism is still being profoundly impacted by the Covid-19 pandemic,” noted Ambrose So Shu Fai, vice-chairman and chief executive of the group, in comments cited in a press release issued shortly after the results announcement to the bourse.

First quarter net gaming revenue was HKD2.35 billion, down from HKD2.41 billion a year earlier.

The group’s Cotai resort, Grand Lisboa Palace, which opened on July 30, generated gross revenue of HKD271 million in the first quarter, compared to HKD370 million for the five months after it launched.

“Given our confidence… in the eventual recovery of Macau tourism and in SJM’s prospects for obtaining a new concession extending beyond 2022, we have continued to introduce additional elements in retailing and food and beverage at our new Grand Lisboa Palace, whilst focusing on cost controls and efficiency,” noted Mr So in his commentary on the first-quarter highlights.

Grand Lisboa Palace’s first-quarter casino gross gaming revenue (GGR) was HKD156 million, and non-gaming revenue amounted to HKD115 million. After adjusting for pre-opening expenses of HKD132 million, the resort’s adjusted property EBITDA was negative by HKD216 million.

The group’s main casino hotel on Macau peninsula, Grand Lisboa, had first-quarter gross revenue of HKD592 million, via HKD551 million in GGR and non-gaming revenue of HKD41 million, as compared with HKD585 million in GGR and non-gaming revenue of HKD36 million in the first quarter 2021.

Grand Lisboa’s adjusted property EBITDA was negative HKD128 million, as compared with negative HKD143 million in the first quarter last year.

The group had HKD1.75 billion in cash, bank balances, short-term bank deposits, and pledged bank deposits; and HKD22.81 billion of debt as at March 31.

During the first three months this year, SJM Holdings’ VIP GGR was HKD344 million, a decrease of 29.1 percent year-on-year.

Mass-market GGR was just under HKD2.06 billion, an increase of 0.3 percent year-on-year. Slot machine GGR was HKD139 million, an increase of 19.5 percent from the prior-year period.

On February 28, the group had extended until the same date in 2023, the maturity of its syndicated banking facilities, originally consisting of a HKD15-billion term loan and HKD10-billion in revolving credit, of which HKD13.3 billion was outstanding.

“The group expects to complete a refinancing of these facilities within the coming quarter,” the firm said in its Tuesday filing.

JP Morgan Securities (Asia Pacific) Ltd said in a recent note that pending such refinancing, the liquidity position of SJM Holdings was “somewhat worrying”, with currently about six months’ leeway: the shortest of any of Macau’s six operators.

But the institution’s analysts DS Kim, Amanda Cheng and Livy Lyu, stated in a Tuesday note, following the first-quarter results: “We are incrementally less worried about the liquidity situation after today’s earnings call, as management is very confident about getting the necessary funding in the coming months, if not weeks, from either upsized bank loans – which we view as less likely – or shareholder loans: much more likely, in our view.”

(Updated 8.20am, May 4)