SJM results mostly in line, VIP disappoints

Casino operator SJM Holdings reported slightly lower-than expected gaming revenue in the first quarter of 2017, down 5.3 percent year-on-year to HK$10 billion (US$1.3 million).

SJM in its filing on Thursday noted that the group’s gaming revenue accounted for 16.9 percent of Macau’s casino gaming revenue during 17Q1, down from 20.2 percent in the prior year period.

Adjusted EBITDA was only slightly higher than consensus, at HK$843 million, compared to consensus of HK$826 million.

Analysts note however that the group saw strong mass performance in the quarter.

“On a portfolio-wide basis mass GGR grew 2 percent vs. a decline of 12 percent for VIP,” said Union Gaming analysts in a Thursday note.

SJM’s satellite casinos took the biggest hit in the VIP segment, noted the brokerage.

“We note that top-line performance at the 3rd party casinos continues to be quite weak, which we would attribute to customers of these legacy properties shifting towards the newer properties that offer better value for money.”

Grand Lisboa however grew both mass GGR (+8 percent year-on-year) and VIP GGR  (+7 percent year-on-year) in the quarter.

Union Gaming says they expect this property to continue to post year-on-year growth over the remainder of 2017 “driven in part by new premium mass rooms that enjoy the benefits associated with table reclassifications. At the same time we believe the property is enjoy some increased demand from junkets.”

Regarding the company’s Grand Lisboa Palace development, the casino operator noted that the opening is now estimated to be in the second half of 2018, rather than the previously set 18H1.