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SJM Profit Jumps as Chinese Gamblers Bet More in Macau

SJM Holdings Ltd. (880), Asia’s biggest casino company, reported full-year profit that beat analyst estimates as mainland Chinese gamblers bet more in Macau.

Net income rose 14 percent to HK$7.71 billion ($994 million) in 2013, SJM said in a statement yesterday after the market’s close. That surpassed the HK$7.58 billion average of 15 analyst estimates compiled by Bloomberg. Gaming revenue climbed 10 percent to HK$86.96 billion.

SJM, owner of the Grand Lisboa project in Macau’s city-center, joins Sands China Ltd. (1928) and Melco Crown Entertainment Ltd. (6883) in posting higher earnings as the number of Chinese visitors to Macau rose 10 percent to 18.6 million last year. Travelers from the mainland, making up more than 60 percent of arrivals to Macau, are helping fuel a boom in the only Chinese city where casinos are legal.

Earnings were boosted by “high-margin mass market growth,” Grant Govertsen, a Macau-based analyst at Union Gaming Group LLC, wrote in a note after the results. “We believe the outlook for SJM remains positive, and especially so at its flagship Grand Lisboa property.”

SJM climbed 2.1 percent to close at HK$24.90 in Hong Kong trading, the biggest gain since Feb. 7. The city’s Hang Seng Index rose 1.7 percent.

The company, founded by gambling mogul Stanley Ho, proposed a special dividend of HK$0.30 a share and a final payout of HK$0.50, taking the total to HK$1 last year, 11 percent more than in 2012.

Smaller Share

SJM, which controls 20 of the 35 casinos in Macau, said its overall market share fell to 24.8 percent in 2013, from 26.7 percent a year earlier. Its mass-market table gaming revenue increased 13 percent and that from VIPs, or high-stakes bettors, rose 9.4 percent last year.

The company gained mass-market share in the fourth quarter, boosted by a premium-mass lounge at Grand Lisboa that opened in October, said Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG.

Competition is intensifying as operators including Sands China, Wynn Macau Ltd. (1128) and MGM China Holdings Ltd. (2282) draw gamblers to their resorts with shopping, dining and theatrical shows. They are also expanding in Macau’s Cotai area, Asia’s version of the Las Vegas Strip, where SJM doesn’t yet have a presence.

The former casino monopoly on Feb. 13 broke ground on its first resort in Cotai. The HK$30 billion project named Lisbon Palace is scheduled to open in 2017, two years later than competing resorts such as Melco Crown’s Studio City.

SJM has stepped up efforts to gain premium-mass players, who place bigger stakes than mass-market bettors and incur lower costs than VIPs brought in by middlemen. The operator is also wooing mass-market players including vacationers who provide additional revenue through shopping, dining and concerts.

Gambling revenue in Macau jumped 19 percent last year to $45.2 billion, about seven times that of the Las Vegas Strip and making the Chinese city the world’s largest casino-gambling hub.

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

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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