SJM Holdings Limited saw its gaming revenue fall 2.0% for the six months to 30 June, with both mass market and VIP declining 0.5% and 3.4% respectively.
Total revenue for the period was HK$20.64 billion, down 1.9% year-on-year, with gaming revenue coming in at HK$20.38 billion. Adjusted EBITDA was down 7.7% to HK$1.51 billion.
The results included a 5.9% year-on-year decline and 1.0% sequential increase in 2Q17 to HK$10.5 billion, with EBITDA for the quarter down 16% year-on-year to HK$665 million. However, SJM noted that EBITDA was heavily impacted by the one-time HK$52 million cost of changing service providers at Jimei casino as well as another HK$54 million for the hiring of non-gaming staff at Jai Alai.
The second quarter results came on the back of a 4% decline in mass market revenue, with SJM losing market share in both the mass and VIP segments during the three months to 30 June despite VIP revenue growing 7% year-on-year (down 1% sequentially).
“Grand Lisboa had tried to expand its premium mass marketing efforts in Q2 with a larger marketing force and had opened the premium mass Dragon Club in March, but performance has been uninspiring,” said brokerage Sanford C Bernstein.
“Bad luck in Premium Mass at the property resulted in a HK$60 million negative impact on property EBITDA (a 14% negative impact). We estimate that premium mass at the property represents only ~20% of mass tables GGR. Without a stronger premium mass presence, the property will continue to significantly underperform.”
Bernstein also flagged the absence of a Cotai presence as hampering SJM’s potential, a problem exacerbated by the current suspension of construction work on Grand Lisboa Palace.
“Management highlighted that the opening timeframe would not be materially affected and still should be in 2H18 … however we believe that at this stage it is not out of the question that Grand Lisboa Palace may not open until 2019,” Bernstein said.
Commenting on the H1 and Q2 results, SJM Holdings CEO Dr Ambrose So said, “We are delighted to conclude the loan facilities for our Grand Lisboa Palace project in the first half of the year. The positive response of the banking community reflects the strength of SJM and the bright prospects of our Cotai project. We look forward to planting our flag in Cotai in 2018 which will ensure our business’ growth in future.”
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