CBRE Capital Advisors Inc says Macau casino operator SJM Holdings Ltd has a “renaissance story in the making,” as it pivots its Grand Lisboa Palace (GLP) gaming complex (pictured) in Cotai to cater to mass-market patrons. The institution’s commentary was based on meetings it hosted last week in London, with Christopher Ip Shih Ming, who took over as SJM Holdings’ chief financial officer in December.
Under a new management, SJM Holdings “is institutionalising the business,” and is “proactively introducing the company to investors globally,” wrote CBRE analysts John DeCree and Max Marsh in a Tuesday memo about the meetings in the United Kingdom capital.
The analysts observed that SJM Holdings was “looking to reposition Grand Lisboa Palace” marketing-wise “to better cater to base mass customers, increase visitation to the property, and identify operating efficiencies”.
“Some of these initiatives include improving retail tenant occupancy and mix, adding new food and beverage outlets, new marketing initiatives, and cross-asset cooperation,” they added. “While these initiatives will take time to bear fruit, we see green shoots for SJM.”
In March, management of SJM Holdings mentioned the introduction in late December of a new “centralised platform” to manage its self-promoted properties and reposition the marketing of existing satellite casinos.
The centralised system “aims to better manage operating costs and improve cross-property synergies,” stated the company at the time.
SJM Holdings had also mentioned a goal for the HKD39-billion (US$5.0-billion) Grand Lisboa Palace to achieve a 5.0 percent market share in Macau in terms of casino gross gaming revenue (GGR).
In May, the company’s chairman Daisy Ho Chiu Fung admitted in response to a question from GGRAsia that such market-share target might be difficult to achieve this year.
Ms Ho stated: “Frankly speaking, whether we can achieve 5 percent this year – we may not be able to pace ourselves for achieving it this quickly.”
But she noted that gaming operations at Grand Lisboa Palace had been seeing improvement in daily visitor volume.
The Cotai property’s first-quarter casino GGR reached HKD1.11 billion, according to financial highlights issued in May by SJM Holdings.
According to CBRE’s Tuesday memo, the casino firm’s management “hopes to more than double Grand Lisboa Palace’s [GGR] market share to 5 percent over the long-term (next 2+ years).
“While [SJM Holdings’] management recognises this is an ambitious target, the company has an array of strategic initiatives aimed at improving market share over the next couple of years, including property repositioning and capex [capital expenditure], enhanced marketing initiatives, and improved connectivity across its entire asset base,” added the CBRE team.
The institution noted that SJM Holdings was looking to open “10 new food and beverage outlets” at Grand Lisboa Palace over the next 12 months.
SJM Holdings announced in late May two separate agreements – valued at HKD197.5 million – to acquire assets from its parent company. It said the deals “aimed at enhancing its culinary leadership and strengthening its mass market presence” in the Macau market.
CBRE also said that the casino firm was looking to upgrade “tenant quality and mix” at the Cotai property, in order to “drive foot traffic and higher tenant sales”.
In terms of capital expenditure, some of it will in likelihood include “deployment of smart digital tables, expected to roll out later this year at Grand Lisboa [on the peninsula] and at Grand Lisboa Palace in 2025,” stated CBRE.
