Macau casino operator SJM Holdings Inc. said in a note at BofA Securities on Tuesday that it is expected to operate the 1,892-room Grand Lisboa Palace (GLP) resort by the end of the year, citing the company’s management. 경마사이트프로
SJM fully opened two hotels at Grand Lisboa Palace, while its third hotel, Palazzo Versace Macau, opened in late April. “But due to labor shortages, the market share is currently limited to 70 percent,” says Ronald Leung, Candice Zhang and Yoyo Pang, analysts at BoFA Securities.
On Monday, SJM Holdings reported adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) of HK$31 million ($4 million) in the first quarter of 2023, compared with a negative figure of HK$474 million for the same period last year.
Grand Lisboa Palace Adjusted Real Estate EBITDA posted a negative of HK$230 million in the first quarter of this year, compared with a negative of HK$216 million a year ago.
According to BofA Securities, SJM Holdings’ management “expects Grand Lisboa Palace to achieve an EBITDA break in Q3 if it achieves a market share of 2.5%.”
After an investment call with SJM Holdings management, analysts at the institution said the daily operating cost of the Kotai complex was HK$5.1 million in the first quarter of 2023 and “expect an increase from the current 3,400 people to HK$8 million.”
Despite a positively adjusted return to EBITDA, SJM Holdings’ quarterly performance still lags behind its industry peers on a “weak” recovery to pre-COVID levels, JP Morgan Securities (Asia Pacific) suggested in a note on Monday. DS Kim and Mufan Shi said the group’s positive EBITDA numbers were only a “3%” recovery in the first quarter of 2019, with other market rivals posting a recovery rate of about 50%.
They added: “Yes, the EBIT would have been much higher if the ITDA had been well maintained. (Unfortunate for both VIPs and the public in Q1.) EBITDA would have been much stronger. (Except for the loss of Grand Lisboa Palace and the excess staff of five closed satellites).”
JP Morgan said Kotai properties are not yet “achieving significant numbers of customers to generate significant sales” given that they are “not well positioned” and “lack of destination appeal.”
“In addition, the demise of Junkocket means that everyone has to create their own high-end businesses. SJM may not be as easy as you think because it lacks experience or database in this area,” he added.
Nevertheless, casino operators’ “significant cost-cutting efforts” during the COVID-19 pandemic were “core positives.”
“By 2024, we believe SJM’s self-operating casino all-in operating costs will be 5%-10% higher than pre-COVID levels, despite significant additional capacity from flagship Grand Lisboa Palace, thanks to significant cost-cutting efforts during the pandemic,” the brokerage’s memo suggested.
