Supplier News

China – SJM profits slashed by 81 per cent as Macau gloom continues

By Phil - 4 November 2015

SJM Holdings, the operator that held a monopoly for casinos in Macau for 40 years, has lost more than just market share in the third quarter, reporting a fall in profit of over 80 per cent.

Gaming revenue for the three months ending September 30 fell by 38 per cent to HKD 11.2b (US $1.45bn), with earnings dropping 49.5 per cent to HKD 884m and profit down a staggering 81 per cent to HKD 285m.

The group said: “Profit was affected by an impairment loss on an available-for-sale investment of HK$250m incurred in Q3 2015 (Q3 2014: Nil), without which profit would have decreased by HK$3,104m in the first nine months of 2015.”

This would have seen profit fall by 65 per cent and not 81 per cent.

During the quarter, the group’s VIP gaming revenue suffered, generating just HK$5,442m, a decrease of 47.5 per cent from HK$10,375m from the third quarter of 2014. Mass market gaming revenue was HK$5,529m, a decrease of 24.9 per cent from HK$7,359m, and slot machine (and Tombola) revenue was HK$272m, a decrease of 23.8 per cent from HK$357m.

SJM currently operates an average of 458 VIP gaming tables, down from 564 for the third quarter last year), 1,263 mass market gaming tables, up from 1,190 last year and 2,737 slot machines, down from 2,806 for the quarter a year ago.

Total VIP chips sales came in at HK$160bn, down from HK$360bn for the corresponding quarter last year and the VIP gaming hold percentage was 3.36, compared to 2.88 per cent.

The Grand Lisboa Hotel achieved an average occupancy rate of 85 per cent and average room rate of HK$1,743 per night, as compared with average occupancy rate of 90.5 per cent and average room rate of HK$2,261 per night in Q3 2014.

Dr. Ambrose So, Chief Executive Officer of SJM Holdings Limited, said: “While challenging conditions in Macau’s gaming market continued in the third quarter, with gaming revenues continuing their decline for the sixth consecutive quarter, SJM is making progress in controlling costs and enhancing customer service. Our strong balance sheet positions us well for the completion of the Lisboa Palace project which remains on schedule and on budget, and we remain optimistic about the future.”

SJM revealed that its gaming revenues accounted for 21.3 per cent of Macau’s market during the period, compared with 22.5 per cent slice for the same time last year.

An analyst at Japanese brokerage Nomura said: “SJM continues to lose market share, in our view, as new openings take market share from weaker casino properties like Casino Lisboa and SJM satellite casinos.”
SJM has slid to third place in terms of the amount of GGR it generates.

Galaxy Entertainment’s share of the market increased to 24.7 per cent share whilst Sands China has 23.1 per cent. Analysts believe that SJM will lose more of the market until it opens Lisboa Palace on Cotai in late 2017.