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SJM Holdings Limited Announces Lower-than-expected First Half Results
Macau casino operator SJM Holdings Limited reported interim financial results for the first half of 2016, resulting in a 20.6% year-over-year decline in total revenue to $2.72 billion.
SJM Holdings Limited, which is behind the iconic Casino Grand Lisboa, saw adjusted earnings before interest, tax, depreciation and amortization decline 27.8% year-over-year to $210.14 million, while net profit for the six-month period fell 38.7% to $141.42 million, compared to analysts' previous estimate of about $219.16 million.
SJM Holdings Limited further reported that VIP gaming revenue fell 28.5% year-over-year to $1.31 billion in the first six months of 2016, while the business of the popular market table also fell 11.5% to $1.31 billion.
The drop is seen as a positive sign that players are choosing to use cash at casinos in the newly fashionable Kotai region surrounding more traditional sites on the Macau Peninsula.
"SJM Holdings Limited' market share is shrinking as Kotai becomes the top tourist destination for tourists instead of the Macau Peninsula, where SJM Holdings' casino and hotel operations are currently located," UOB Keihian analyst Hanna Lee told the South China Morning Post newspaper. "In addition, the flagship VIP room business is likely to be hit by stricter regulations on junket operations."
The casino operator will open a $3.86 billion Grand Lisboa Palace venue in the Kotai district in the second half of next year, where the 2,000-room development will compete directly with Melco Crown Entertainment's Studio City Resort and Sands China Limited's Venetian Macao luxury hotel and casino. Consisting of three five-star hotels, including one designed by German fashion expert Karl Lagerfeld, the venue can offer up to 500 additional game tables.
"The Group's performance in the second half of 2016 will still be affected by overall economic performance in the surrounding region, government regulatory policy and the level of visits to Macau, as well as the competition of Macau casino operators," said a statement from SJM Holdings Limited published on the Hong Kong Stock Exchange. "During this period, the group is committed to maintaining its strength in the mass market and VIP gaming sectors as it strives to improve operational efficiency. The group is optimistic about its performance for the rest of the year."
In May, the casino operator owned by Hong Kong business magnate Stanley Ho and his family saw first-quarter net profit fall 44.1% year-over-year to $72.32 million, while adjusted earnings for the three months before interest, tax, depreciation and amortization fell 32.5% to $180 million.
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