Operator News

China – Opening of Grand Lisboa Palace could be delayed until 2021

By Phil - 18 March 2020

With construction work on the long-delayed Grand Lisboa Palace completed in late 2019 and an application made for the relevant licenses in the second half of 2020, Sociedade de Jogos de Macau will be bemoaning the dilapidating effects of the coronavirus even more than most of Macau’s casino operators.

The group has been in desperate need of opening on Cotai for some time, but with the whole sector now in disarray from the 15 day closure and the suspension of most of the travel into Macau, including a ban on all visitors except from mainland China, Hong Kong and Taiwan, it will be praying for the market to recover before lifting the curtain.

JP Morgan analysts DS Kim, Derek Choi and Jeremy An said: “SJM has not changed official target opening of end- 2020, as construction has already been completed and opening date will be dictated by the progress of government approvals (which is unpredictable). The management’s level of conviction on this timeline seems lower than a quarter ago (understandably so), and we keep first-quarter 2021 opening in our model (which we think is a consensus view by now).”

When open, the Grand Lisboa Palace will comprise a total gross floor area of 521,435 square metres plus 77,158 square metres of parking area. More than 90 per cent of the total area will be devoted to a full range of non-gaming facilities, including hotel towers bearing the insignia Grand Lisboa Palace, Palazzo Versace and Karl Lagerfeld, totalling approximately 1,900 rooms, plus facilities for events, meetings and conferences, shopping, dining and entertainment, and a casino, at an estimated total project cost of approximately $39bn.

The group’s market share slid further in 2019 coming in at 14.1 per cent of Macau’s gross gaming revenue, including 18.2 per cent of mass market table gaming revenue and 10.4 per cent of VIP gaming revenue. The group generated revenue of HK$33,159min 2019, a decrease of 1.5 per cent from the previous year. .Adjusted EBITDA of the Group came in at HK$4,213m, an increase of 13.2 per cent from the previous year and profit at HK$3,207m, an increase of 12.5 per cent from the previous year.
The Group’s flagship Casino Grand Lisboa had a decrease in gross gaming revenue for the year of 17.6 per cent.

VIP gross gaming revenue decreased by 30.4 per cent in 2019 while mass market table gross gaming revenue increased by 8.9 per cent. SJM operates 275 VIP gaming tables in operation with 15 VIP promoters. It operated VIP gaming in 13 of its casinos.

Mass market table gaming operations comprised 62.8 per cent of the Group’s total gross gaming revenue in 2019. SJM had 1,511 mass market gaming tables in operation and 2,439 slots.

As well as Casino Lisboa, SJM operates Casino Oceanus at Jai Alai, Casino Taipa and 16 satellite (third party-promoted) casinos.

With regards to the impact of the coronavirus, Daisy Ho, Chairman and Executive Director, said: “The disruption of SJM’s business due to the outbreak of COVID-19 is expected to have a material adverse effect on the group’s results in the first half of 2020 and potentially beyond. It is not possible to predict the full extent or duration of the impact, however, as it will depend on the progression of the disease and efforts to control it.”