GGRAsia – SJM trims 1H loss and EBITDA leaps 276pct y-o-y

SJM trims 1H loss and EBITDA leaps 276pct y-o-y

Aug 27, 2024 Newsdesk Latest News, Macau, Top of the deck

First-half loss at Macau casino operator SJM Holdings Ltd narrowed to HKD162.4 million (US$20.8 million) from HKD1.26 billion in the first half of 2023.

Total group revenue for the opening six months of 2024 rose 47.4 percent year-on-year, to HKD13.80 billion, the company said in a Tuesday filing to the Hong Kong Stock Exchange.

Net gaming revenue went up 48.3 percent year-on-year, to nearly HKD12.90 billion in the six months to June 30.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) jumped by 275.9 percent, to just over HKD1.73 billion in the reporting period. The company said its EBITDA margin grew by 7.7 percentage points year-on-year, to 12.6 percent in the first six months of 2024.

The firm’s flagship operations are Grand Lisboa, a casino hotel on Macau peninsula, and Grand Lisboa Palace (pictured), its large-scale resort in the city’s Cotai district.

Daisy Ho Chiu Fung, chairman of SJM Holdings, said in a press release issued on Tuesday: “Throughout the first half of 2024, the group made significant progress in both gaming and non-gaming sectors, achieving steady growth through continuous innovation and service optimisation.”

She added: “Moving into the latter part of the year, we will intensify our efforts to broaden our food and beverage portfolio, launching a variety of new destination dining outlets and exclusive gastronomic events, alongside advancing the initial phase of the Kam Pek Market revitalisation plan.”

The latter was a reference to a food market project for tourists in downtown Macau as part of the group’s gaming concession commitments to the Macau government.

In the first six months, Grand Lisboa Palace’s gross revenue was nearly HKD2.96 billion, including gross gaming revenue (GGR) of almost HKD2.33 billion, and non-gaming revenue of HKD631 million. That compared to GGR of just above HKD1.03 billion and non-gaming revenue of HKD396 million in the first half of 2023.

Grand Lisboa Palace’s adjusted property EBITDA was HKD192 million, as compared with a negative HKD292 million in the first half of 2023. The company was said to have pivoted its Cotai gaming complex to cater to mass-market patrons.

Grand Lisboa Palace outlook

Analyst Vitaly Umansky of Seaport Research Partners said in a memo after the results: “Ramp up at Grand Lisboa Palace is critical for the stock to show positive uplift momentum.”

But he added: “The ramp up so far, and in the latest quarter, remained weak in our view, achieving only 2.2 percent market share.”

While this was up 22 basis points quarter-on-quarter, according to Seaport, it was “partly helped by high VIP hold of 3.7 percent”.

Mr Umansky added that while SJM Holdings’ management “does not believe that the ongoing crackdown on… money changers is having a material impact on the business,” Seaport remained “concerned about Grand Lisboa’s Palace slow pace of ramp up”.

He wrote: “The return on the investment remains abysmally low and unlikely to achieve anything approaching positive value creation (versus cost of investment) in the foreseeable future (if at all).”

the analyst further noted: “The strategy around Grand Lisboa Palace is still being worked on, with the company hiring additional sales and marketing staff during the quarter.”

In downtown Macau, Grand Lisboa’s gross revenue was HKD3.80 billion, including GGR of HKD3.66 billion and non-gaming revenue of HKD140 million. In first half 2023 it recorded GGR of just below HKD2.27 billion and non-gaming revenue of HKD137 million.

Grand Lisboa’s adjusted property EBITDA was HKD1.01 billion, as compared with HKD473 million in the first half of 2023.

SJM Holdings said it had a 12.5 percent share of Macau’s GGR in the first half this year, including 15.2 percent of mass market table GGR, and 4.4 percent of VIP GGR.

In first-half 2023, it had reported market share of 11.8 percent in Macau gaming revenue, including 14.9 percent of mass market table GGR, and 3.5 percent of VIP GGR.

The group had just over HKD3.43 billion of cash, bank balances, short-term bank deposits and pledged bank deposits; and just under HKD26.97 billion of debt as at June 30 this year.

The group’s syndicated banking facilities consist of a HKD9 billion term loan and a HKD10 billion revolving credit facility, of which HKD4.1 billion was undrawn as of June 30.

(Updated Aug 28, 9.40am)