SJM Holdings is one of the six major casino operators in Macau and the parent company to some of the most well known casinos in Macau including the Grand Lisboa Casino, Hotel Fortuna Casino and the Casino Golden Dragon.
The company recently announced that it had witnessed yet another decline in its profit and revenue generation during the first quarter of 2016 but those weak results still beat the earlier predictions by gaming analysts which were a lot lower. SJM Holdings which was founded by Hong Kong billionaire Stanley Ho saw overall gaming revenue drop by 22.8 percent to $1.42 billion, mass market revenue drop by 14.9 percent to $5.14 billion and VIP gaming revenue drop by 29.2 percent to $5.6 billion.
The profit received by the company owners during the first quarter of 2016 dropped to HK$ 561 million, which was a 44.1 percent decline when compared to the same quarter in 2015, while SJM Holding’s earnings before interest, taxes, depreciation and amortization (EBITDA) dropped by 32.5 percent to HK$838 million.
Bernstein analysts stated that Mass and the Grand Lisboa did not perform as well as they expected but SJM Holdings did better than what they had predicted due to the performance of the company’s satellite and other self promoted casinos. However Bernstein has stated that the company will continue to struggle in the coming months as they have a number of issues to work out including an over dependence on the VIP and satellite segment, concerns on governance, conflict of interest and a tough shareholder structure.
SJM Holding as a group has taken a beating during the last 24 months as Macau’s casino industry has reeled under the pressure from Beijing’s anti-corruption crackdown. The group had occupied a 22.7 market share of the casino gaming revenue generated in 2015 but that number has already fallen to 20.2 percent in 2016. The company has invested heavily into its new Grand Lisboa Palace which is being constructed on the Cotai strip at an estimated $4 billion and is expected to be completed before the end of 2017.
Union gaming analysts stated that while SJM Holdings managed to do better than what analyst had earlier predicted, the company’s performance was still weak when compared to other casino operators in Macau.
In a statement, Union gaming said “The total GGR decline at SJM of 23 percent compared unfavourably to the market down 13 percent, although this isn’t surprising and we look for market share erosion to continue in the quarters ahead as incremental new supply comes online in Cotai.”
Macau’s VIP segment dropped by 19 percent whereas SJM Holdings dropped by 29 percent and Macau’s mass market dropped by 5 percent whereas SJM Holdings dropped by 15 percent.