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Waiting on the Palace

SJM’s 15 satellite casinos brought in more gaming revenue during the first quarter than its Grand Lisboa property

Local casino operator SJM Holdings Limited, operator of the Grand Lisboa and Hotel Lisboa, and soon-to-be Grand Lisboa Palace in Cotai, raked in more revenue through its satellite casinos during the first quarter of the year than it did through its own Casino Grand Lisboa, according to the group’s first quarter results published with the Hong Kong Stock Exchange.
In total, the group made HK$5.17 billion in revenue through its 15 satellite third party-promoted casinos as compared to HK$3.68 billion from its Casino Grand Lisboa operation. However, the group’s adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) amounted to roughly three times that of the satellite casinos, as HK$474 million, as compared to HK$170 million. The group’s other self-promoted casinos, including Jai Alai and Casino Taipa, generated HK$1.53 billion in revenue, with HK$150 million in adjusted EBITDA.
The gaming revenue of the group underwent a 5.3 per cent drop in the first quarter, year-on-year, reaching HK$10.39 billion, contributing to the 5.2 per cent drop in the group’s overall revenue, at HK$10.53 billion. Profit attributable to owners of the company, however, still saw a 3.3 per cent increase, reaching HK$580 million during the period.
Overall, the group’s adjusted EBITDA saw a 0.7 per cent increase to HK$843 million during the quarter.
‘The Group’s gaming revenue accounted for 16.9 per cent of Macau’s casino gaming revenues during the first quarter of 2017, as compared with 20.2 per cent in the first quarter of 2016,’ notes the group in the filing.
VIP gaming revenue saw a 12 per cent decrease year-on-year during the first three months of the year, reaching HK$4.93 billion, although the group was propped up by a 1.9 per cent year-on-year increase in mass market gaming revenue, which hit HK$5.19 billion.
VIP rolling chip reached HK$157.7 during the quarter, in which it operated 315 VIP gaming tables, 1,357 mass market gaming tables and 2,549 slot machines
‘During the first quarter of 2017, the Grand Lisboa Hotel achieved an average occupancy rate of 93.5 per cent and average room rate of HK$1,585 per night,’ notes the filing. Revenue from the group’s hotel, catering and related services amounted to HK$139 million during the period.
Capital expenditure of the group during the first quarter of the year reached HK$1.43 billion ‘which was primarily for construction in progress,’ alluding mostly to the Grand Lisboa Palace, for which it notes in the filing the group ‘continued to make progress on construction’ in the quarter.
The company points out the HK$25 billion loan it arranged on April 6 was to be ‘primarily used to finance the construction of the Grand Lisboa Palace’.
The group also notes that it maintained a ‘strong and liquid financial position,’ with HK$12.66 billion in cash, bank balances and pledged bank deposits, with HK$503 of debt as at the end of the quarter.