GAMING: SJM net profit up 14 percent

2014-2-27

From：Macau Daily Times

SJM Holdings Ltd reported full-year profit that beat analyst estimates as mainland Chinese gamblers bet more in Macau.
Net income rose 14 percent to HKD7.7 billion (USD993 million) in 2013 from HK$6.75 billion a year earlier, according to a statement to Hong Kong’s stock exchange today. That surpassed the HK$7.58 billion average of 15 analysts’ estimates compiled by Bloomberg. Gaming revenue climbed 10 percent to HK$86.96 billion.
SJM joins Sands China Ltd. and Melco Crown Entertainment Ltd. in reporting improved results in the world’s largest casino gambling hub as Chinese visitors to Macau rose 10 percent to 18.6 million last year, according to the city’s tourist office. Those travelers, who accounted for more than 60 percent of total arrivals, have helped fuel a boom in the country’s only city where casinos are legal.
The homegrown company, which controls 20 of the 35 casinos in Macau, had a market share of 24.8 percent in 2013, compared with 26.7 percent a year ago. The company’s mass market table gaming revenue increased by 13 percent while gambling revenue from VIPs, or high-stake bettors, rose 9.4 percent last year, it said.
SJM, founded by mogul Stanley Ho, faces intensifying competition as rivals including Sands China, Wynn Macau Ltd. and MGM China Holdings Ltd. draw gamblers to their resorts with glitzy malls, restaurants and theaters. They are also expanding in the Cotai area, where SJM currently doesn’t have a presence.
The former casino monopoly on Feb. 13 broke ground on a HK$30 billion Cotai resort, its first in the area that will be named Lisbon Palace. It is scheduled to open in 2017, two years later than projects developed by its peers, including Melco Crown’s Studio City.
SJM’s fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 24.5 percent to HK$2.37 billion in the three months to December, based on Bloomberg’s calculations from adjusted Ebitda of HK$6.31 billion for the first nine months. That beat the HK$2.34 billion average of nine analysts’ estimates compiled by Bloomberg.
SJM has stepped up its efforts in wooing the premium mass and mass market gamblers who bet in cash and provide fatter margins than high rollers, or VIPs. The company gained mass market share in the fourth quarter as Grand Lisboa, its biggest casino, opened a premium mass lounge in October, according to Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG.
The so-called premium mass gamblers make bigger bets in cash than the mass market bettors and incur lower costs than VIPs brought in by middlemen earning commissions.
SJM proposed a special dividend of HK$0.3 per share and a final dividend of HK$0.5 per share, according to the statement. The shares rose 0.4 percent to HK$24.40 before the earnings announcement. The stock has dropped 6.2 percent this year, compared with the benchmark Hang Seng Index’s 3.7 percent decline. Bloomberg

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