SJM’s Profit Jumps 27 Percent, Plans Special Dividend

SJM Holdings Ltd., 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. That beats a consensus estimate of HK$6.6 billion from 25 analysts compiled by Bloomberg.

The company, founded by casino mogul Stanley Ho, owns 20 of the 35 casinos in Macau and faces intensifying competition as rivals including Sands China Ltd. and Galaxy Entertainment Group Ltd. 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’s market share remained steady and was gradually improving,” in the fourth quarter, wrote Kenneth Fong, a Hong Kong-based analyst at JPMorgan Chase & Co. ahead of the earnings announcement.

Full-year adjusted earnings before interest, tax, depreciation and amortization, or Ebitda, rose 10 percent to HK$7.6 billion. 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.

SJM closed 1.8 percent higher at HK$20.15 in Hong Kong yesterday, before the earnings statement. The stock has climbed 12 percent this year, outperforming the benchmark Hang Seng Index which is down less than one percent.

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, mass market revenue increased 13 percent to HK$24 billion. Slot-machine revenue also rose to HK$1.5 billion.

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. and MGM China Holdings Ltd. have also been given approval to develop a casino in Cotai.