SJM Plans Special Dividend After Profit Rose 27 Percent

SJM Holdings Ltd. (880), Asia’s biggest casino company by revenue, reported a 27 percent increase in full-year profit as mainland Chinese gamblers bet more.

Net income rose to HK$6.75 billion ($870 million) from HK$5.3 billion a year earlier, according to a statement to the Hong Kong stock exchange yesterday.

The company, founded by mogul Stanley Ho, owns 20 of the 35 casinos in Macau, including its flagship Grand Lisboa. It faces intensifying competition as rivals including Sands China Ltd. (1928) and Galaxy Entertainment Group Ltd. (27) expand. SJM won a land grant in October to build its first casino resort in the Cotai area, a piece of reclaimed land in Macau that is Asia’s equivalent of the Las Vegas Strip.

SJM fell 3.8 percent to HK$19.38 in Hong Kong trading today.

Fourth-quarter adjusted earnings before interest, tax, depreciation and amortization, or Ebitda, was HK$1.9 billion, based on Bloomberg’s calculations from adjusted Ebitda of HK$5.72 billion for the first nine months. That lagged a median estimate of HK$2.06 billion from six analysts surveyed by Bloomberg News.

“Disappointment came from lower Grand Lisboa margin given higher junket commissions,” Karen Tang, a Hong Kong-based analyst at Deutsche Bank, wrote in a research note today.

SJM and other Macau casinos pay commissions to operators called junkets to bring in high rollers from China’s mainland.

The company proposed a special dividend of 30 Hong Kong cents a share on top of a final dividend of 50 Hong Kong cents a share, according to the statement.

Gambling Revenue

Macau’s casino revenue climbed 14 percent to a record 304 billion patacas ($38 billion) in 2012. SJM’s gambling revenue for the year climbed 4.5 percent to HK$78.9 billion.

The former Macau gaming monopoly’s revenue from VIPs, or high rollers, rose to HK$53.3 billion from HK$52.8 billion a year ago.

Sands earlier said it plans to invest at least $2.5 billion to build its fifth resort, to be called the Parisian, in Macau, the only city in China where casino gambling is legal. The Parisian will have a replica of the Eiffel Tower and family- oriented facilities to attract family-oriented gamblers from China.

Smaller competitors such as Wynn Macau Ltd. (1128) and MGM China Holdings Ltd. (2282) have also been given approval to develop a casino in Cotai.

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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