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China – SJM loses more market share but remains confident of 2018 Cotai completion

By - 1 March 2018

Having seen its market share slide further to just 16.1 per cent in the fourth quarter of 2017, Sociedade de Jogos de Macau, said it was still on course to complete the construction of Grand Lisboa Palace this year.

The operator, who for so long held a monopoly on casino gaming in Macau, said that construction of the Grand Lisboa Palace, the croup’s integrated resort on Cotai had been adversely affected by the category 10 Typhoon Hato in August 2017 and a fire incident in September 2017.

“The group is still striving for construction to complete by the end of 2018 in the absence of other unforeseen events and to seek the relevant licenses to begin operation as soon as possible thereafter,” the group said.

The announcement came alongside SJM’s fourth quarter and Full Year 2017 results where SJM reported that its profit had fallen by 15.6 per cent to HK$1.96bn for the 12 months to 31 December, alongside a revenue increase of a 0.1 per cent revenue to HK$41.29bn. EBITDA fell 10 per cent to HK$3.07bn.

Dr. Ambrose So, Chief Executive Officer of SJM Holdings Limited, said: “Macau saw the beginning of a turnaround in its casino gaming market in 2017, and SJM has entered 2018 in a strong position. In spite of challenges that arose during the past year, we achieved substantial progress on construction of our Grand Lisboa Palace and we are still striving for construction to finish by the end of this year. In 2017 we also opened our Jai Alai Hotel, completing our entertainment complex at Oceanus at Jai Alai. We continue to be optimistic about the future of Macau and of SJM as a major contributor to Macau’s tourism industry.”

SJM had a 16.1 per cent share of Macau’s gaming revenue, including 20.8 per centof mass market table gaming revenue and 13.6 per cent of VIP gaming revenue.

The Group’s flagship Casino Grand Lisboa had an increase in gaming revenue for the year of 5.8 per cent. Grand Lisboa Hotel’s occupancy rate increased by 2.1 per cent to 93.8 per cent for the full year. The Group maintained its strong balance sheet, with cash, bank balances and pledged bank deposits totaling HK$16,037 million and total debt of HK$8,135 million as at 31 December 2017.

Despite the company’s confidence of a 2018 opening for Grand Lisboa Palace, analysts remain sceptical.

Morgan Stanley said: “Capex for Cotai remains at HK$36bn despite the construction accident in June, typhoon in August and fire in September last year.SJM spent HK$16bn up to December 2017 and holds up to HK$20bn in capex for the remainder. The construction is targeted to be completed by end-2018. We expect that the new Cotai property will not open until end-2019 or 2020 due to the license application.”

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