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SJM posts first positive EBITDA since 2019

| By Marese O'Hagan
SJM Holdings has posted its first six-month stretch of positive earnings before interest, tax, depreciation and amortisation (EBITDA) since 2019 in its H1 2023 results.
SJM Holdings H1

Total revenue for the first six months of 2023 rocketed 126.7% to HK$9.36bn (£934.2m/€1.09bn) compared to H1 2022 after Covid-19 restrictions finally eased in Macau.

Breaking this down by property, revenue at Grand Lisboa Palace – which was partially opened in 2021 – was HK$1.43bn. This consisted of HK$1.03bn in GGR and HK$396m in non-gaming revenue. Compared to Grand Lisboa’s performance in H1 2022, revenue grew HK$1.0bn.

SJM noted that during the half-year, Grand Lisboa Palace “continued to increase its market presence”. This involved holding a grand opening of its new hotel tower, The Karl Lagerfeld, as well as opening selected hotel rooms at the Palazzo Versace Macau Hotel tower.

Revenue at Grand Lisboa – a separate entity from Grand Lisboa Palace – was HK$2.40bn. This was mostly made up of GGR, which totalled HK$2.26bn. Non-gaming revenue at the property was HK$137m.

In total, this was an increase of HK$1.62bn year-on-year.

Revenue from other self-promoted casinos – consisting of Jai Alai Hotel and Sofitel at Ponte 16 – totalled HK$2.20bn, up by 200.3%.

SJM’s satellite casinos brought in HK$3.80bn in casino revenue during the quarter. In total, SJM operated nine smaller venues during H1.

Net gaming revenue for the period totalled HK$8.69bn for the six months, a significant improvement of 128.2%. This was generated by SJM subsidiary SJM Resorts.

H1 loss improves despite increased marketing costs

The total loss for the six months came to HK$1.19bn, an improvement of HK$1.56bn year-on-year.

Looking at how this loss came to be, SJM paid HK$3.67bn in special gaming tax. But it was operating and administrative expenses that affected the total most, coming to HK$4.32bn, the highest expense of the half-year.

Marketing and promotional expenses hit $1.56bn. This was a significant increase from the HK$222.6m loss generated in H1 2022.

This could be due to SJM’s increased focus on marketing, relating particularly to the Grand Lisboa Palace property.

Finance costs were HK$810.6m, an increase of HK$412.6m yearly.

The expenses were offset slightly by income relating to hotel, catering, retail and leasing, which totalled HK$666.5m. This was accompanied by other income at HK$102.7m, as well as share of joint venture profits at HK$4.2m.

Macau still seeing signs of recovery

SJM’s performance is indicative of Macau’s recovery from the Covid-19 pandemic.

In its H1 report, SJM noted that visitation had showed a “robust” recovery during the first half of the year, after “three years of severely inhibited travel”. SJM cited figures from the Macau SAR Statistics and Census Service, which showed that visitor arrivals expanded by 236.1% year-on-year.

In July – just after the quarter’s end – GGR in Macau hit a post-pandemic peak of MOP16.66bn.

First six months as a new concessionaire

H1 2023 is also the first half-year period since SJM was selected as one of the operators to receive a concession from Macau’s government. The concessions allow the chosen operators to offer gambling in Macau until 31 December 2032.

SJM received its concession in November 2022, joining MGM Resorts, Galaxy Entertainment Group, Las Vegas Sands, Melco Resorts and Wynn Resorts International.

As part of the process, SJM committed MOP14.03bn to Macau over the decade-long concession. In total, MOP12.0bn will go to non-gaming ventures.

During the half-year, SJM saw a significant change in leadership with the departure of Dr So Shu Fair from the role of CEO, executive director and vice-chairman of SJM in April.

SJM is still currently on the hunt for a replacement. It is currently led by chair Daisy Ho as executive director.

“We have begun our programme of non-gaming events and investments under the new concession and continued the ramp-up of Grand Lisboa Palace Resort,” said Ho. “As Macau recovers steadily from the pandemic, we are facing the future with optimism.”

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