SJM First-Half Profit Rises on Gains From Mass-Market

SJM Holdings Ltd. (880), the Macau casino operator founded by billionaire Stanley Ho, reported a 28 percent increase in first-half profit aided by higher revenue from mass-market gamblers.

Net income climbed to HK$3.41 billion ($440 million) from HK$2.67 billion a year earlier, the company said yesterday in a Hong Kong stock exchange statement. Sales rose 3.9 percent to HK$39.3 billion, similar to the average estimate of three analysts compiled by Bloomberg.

SJM, operator of casinos including the Grand Lisboa and Ponte 16 on the Macau peninsula, faces rising competition from Sands China Ltd. (1928) and Galaxy Entertainment Group Ltd. (27) as demand from rich mainland Chinese gamblers drops. Macau gaming revenue rose 1.5 percent to 24.6 billion patacas ($3.1 billion) in July, the smallest gain since 2009, on easing demand from high-rollers and the effect of a typhoon.

“SJM will see less impact from a VIP slowdown than its peninsula peers,” George Choi, an analyst at Citigroup Inc. in Hong Kong, said in a report to clients. “Its loyal sticky mass- market customers should limit its downside risks.”

The company’s market share dropped to 27 percent from 31.1 percent a year earlier, it said in the statement. SJM’s mass- market table revenue rose 15.1 percent to HK$11.7 billion from HK$10.2 billion a year ago.

SJM shares advanced 0.8 percent to close at HK$15.10 before the announcement. The benchmark Hang Seng Index was little changed.

Market Share

Investors have “over-penalized” the loss of market share, which has stabilized since September 2011, Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG, said before the announcement.

“Market share of higher-margin Grand Lisboa remains solid,” Chan said. Most of the decline was at lower-margin “self-operated and satellite casinos,” he said

SJM, which owns 20 of the 35 casinos in Macau, said earlier this year it was in advanced talks with the Macau government to build a new casino.

The company will pay an interim dividend of 10 Hong Kong cents a share, compared with 8 Hong Kong cents a year ago.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net

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