SJM First-Quarter Net Rises 12% on Higher VIP Spending
(Corrects mass-market gambling revenue in 6th paragraph.)
SJM Holdings Ltd. (880), Asia’s biggest casino company, posted a 12 percent increase in first-quarter profit as high-stakes gamblers spent more at its 20 casinos in Macau.
Net income rose to HK$1.92 billion ($247 million) from HK$1.71 billion a year earlier, according to a statement to the Hong Kong Stock Exchange. Gambling revenue climbed 10 percent to HK$21.7 billion.
Adjusted earnings before interest, tax, depreciation and amortization, or adjusted Ebitda, rose 11 percent to HK$2.1 billion.
SJM is benefiting as new attractions, more hotel rooms and an improved rail connection draw more mainland Chinese visitors to Macau, the world’s biggest gambling center. Deutsche Bank AG estimated casino revenue will rise 17 percent to $44.5 billion this year.
Macau is the only place in China where casinos are legal. The city raked in a record $38 billion gross gaming revenue last year, with two-thirds of that coming from the high-stake gamblers, or so-called VIPs.
SJM’s gambling revenue from VIPs, or high rollers, rose 13 percent to HK$15.1 billion for the quarter ended in March. Mass market revenue climbed 4.7 percent to HK$6.22 billion.
SJM, founded by Hong Kong tycoon Stanley Ho, faces rising competition as rivals including Sands China Ltd. (1928) and Galaxy Entertainment Group Ltd. (27) expand. They have been adding new attractions such as shopping malls and entertainment shows in their resorts on Macau’s increasingly popular Cotai strip to woo gamblers.
SJM, the former casino monopoly, runs 20 out of the 35 casinos in Macau. None of its casinos are located on the Cotai strip, a piece of reclaimed land that’s been built into Asia’s equivalent of the Las Vegas strip. It won a land grant in October to build its first casino resort in Cotai strip.
Shares of SJM climbed 2.5 percent to HK$19.76 in Hong Kong before the earnings announcement. The benchmark Hang Seng Index gained 0.99 percent.
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