SJM Holdings GGR down 4.2% in Q1

The Macau casino operator has reported gross gambling revenue of HK$2.54bn for the first quarter of the year.

Macau.- SJM Holdings has posted a loss of HK$1.28bn (US$163.4m) for the first quarter of the year. That compares with a loss of HK$647m in the same quarter last year. Gross gambling revenue for the quarter fell 4.2 per cent year-on-year to HK$2.54bn. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) came in at negative HK$474m

Ambrose So Shu Fai, vice-chairman and chief executive of the group, noted that inbound tourism was still being profoundly impacted by the Covid-19 pandemic but that the company continued to introduce additional elements in retail and F&B at Grand Lisboa Palace while focusing on cost controls and efficiency.

Grand Lisboa Palace generated gross gaming revenue of HK$156m in the first quarter, while non-gaming revenue amounted to HK$115m. Adjusted property EBITDA narrowed to a loss of HK$128m.

In the first three months of the year, SJM’s VIP gaming revenue was HK$344m, down 29.1 per cent year-on-year. Gross gaming revenue for the mass market was just under HK$2.06bn, up 0.3 per cent year-on-year. Slot machine GGR totalled HK$139m, an increase of 19.5 per cent year-on-year.

In 2021, the company reported a full-year loss of HKD4.14bn (US$530.3m), compared with a loss of HKD3.03bn for 2020.

Analysts at JP Morgan raise concerns about SJM Holdings’ liquidity

Analysts DS Kim, Amanda Cheng and Livy Lyu suggest the casino operator has only six months of liquidity.

Their report states that SJM Holdings’ loan refinancing has stalled due to government delays, which will likely require the company to seek external funding, either through debt or capital. JP Morgan analysts also warned that SJM Holdings’ Grand Lisboa Palace casino resort could take a long time “to ramp up and achieve a critical mass of patrons for breakeven.”

Analysts added that SJM Holdings’ operating expense was “likely to rise from the second half of 2022 amid the likely closure of some satellite casinos” as they believe SJM Holdings will have to bring its gaming staff onto its own payroll. “This would shorten its liquidity runway even further, they analysts noted.