Staff costs weighed on SJM’s latest results: CEO
Increased staffing costs weighed on SJM Holdings Ltd’s third quarter earnings, said its chief executive Ambrose So Shu Fai (pictured) on Tuesday.
The previous day SJM Holdings had reported a 16 percent year-on-year fall in profit for the third quarter.
Kenneth Fong and Isis Wong of Credit Suisse AG in Hong Kong said in a note on Tuesday that the result had missed analyst consensus by 8 percent.
“The disappointment was mainly due to (1) an additional provision of HKD43 million [US$5.5 million] for staff bonuses announced in August 2014; and (2) a HKD20 million one-off mark-to-market loss,” said Credit Suisse.
SJM’s Mr So on Tuesday said: “We had two expenditures that if you add up [exclude them] is about in line with the Street…one is the staff costs.”
As well as staff bonuses announced in August; in September – one day before a threatened work-to-rule by some SJM staff organised by labour pressure group the Forefront of the Macao Gaming – SJM announced so-called living subsidy increases for its staff starting from next year.
The gaming operator said it would award its employees annual subsidies equal to either 1.5 months or 2 months of their monthly salary. The measure would be effective until 2020, the year its current concession expires, it added.
Credit Suisse said on Tuesday regarding SJM’s third quarter showing: “…SJM is likely to underperform peers in this slower growth environment due to relatively older products and lack of non-gaming facilities.”
Grant Govertsen and Felicity Chiang of Union Gaming Research Ltd said in their note on Tuesday: “The company’s legacy properties are bearing the brunt of the weakness, with VIP very soft at the original Lisboa casino…”
Mr So said on Tuesday that his firm recognised the challenges it faced and was going “full speed ahead” with its HKD30 billion Lisboa Palace project on Cotai. It will have a range of non-gaming facilities including shopping and entertainment.
He said: “In this tight competition we are facing now we do not have more capacity – in the way we would wish – until our [Cotai] property is finished in 2017. That’s why we are going full speed ahead on our construction on Cotai.”
He stated the firm was also adding more gaming tables at Grand Lisboa.
An SJM associate company said in a Hong Kong filing in October that SJM had been awarded 45 extra gaming tables this year by the Macau government. The associated business – Macau Legend Development Ltd, which uses SJM’s gaming licence to run two casinos in the city, will employ 35 of the tables, with the balance going to SJM.
Mr So on Tuesday said: “…we are going to put more tables in the premium mass [segment] and early next year we’ll put another 15 tables in [on the site of] our congee and noodle shop, which is now under renovation.”
SJM’s chief executive was speaking on the sidelines of a event announcing the return of SJM Theodore Racing – a motor racing team started by Teddy Yip, a founder of SJM’s parent firm STDM – to the Macau Grand Prix after a 21-year absence. The race meeting is to be held this weekend.
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