SJM scraps plan to redevelop Lisboa casino

PUBLISHED : Tuesday, 24 March, 2009, 12:00am
UPDATED : Tuesday, 24 March, 2009, 12:00am

SJM Holdings said net profit fell 48.1 per cent last year and 77.6 per cent in the second half as a slowdown in Macau's casino industry prompted the firm to scrap a HK$12 billion plan to redevelop the 39-year-old Lisboa casino hotel.

SJM, which completed a HK$3.85 billion initial share sale in July last year, said net profit last year fell to HK$796.1 million from HK$1.53 billion in 2007. Gaming revenue fell 12.92 per cent to HK$27.99 billion after a surprising 3.63 per cent increase in mass-market casino revenue failed to offset a 20.73 per cent slump in VIP betting volumes.

Profit plunged to HK$225.1 million in the six months to December from HK$1.01 billion a year earlier after Macau's five-year casino boom ground to a halt on regional recessions, a credit crunch among high rollers and Beijing's travel restrictions.

'Our industry was experiencing severe price competition for junket customers, visa restrictions on mainland visitors to Macau and the global credit crisis,' SJM chief executive Ambrose So Shu-fai said yesterday.

'While our operating results were significantly down from the past, we retained our leading position with market share,' he said, citing a 30 per cent share of Macau's casino revenue in the year to date compared with 26.5 per cent for last year.

Wagers by high rollers fell 28.8 per cent in the second half to HK$244.44 billion as junket partners curtailed credit to players, driving down net VIP winnings 33.5 per cent to HK$6.69 billion.

But despite restrictions on mainland visitors, revenue from walk-in 'mass-market' cash players increased 1.5 per cent to HK$5.38 billion.

Macau's lopsided casino industry downturn prompted SJM to scrap HK$4.7 billion options to buy the original Casino Lisboa from controlling shareholder Sociedade de Turismo e Diversoes de Macau (STDM) and redevelop it into a HK$12 billion complex of casino hotels, residential towers and shopping arcades.

SJM's listing prospectus had earmarked HK$1.3 billion of its initial public offering proceeds to acquiring the 94 per cent of the Lisboa site it didn't already own, along with a similar stake in a plot of land in the nearby Nam Van Lakes area.

But the company announced late Friday it would instead jointly redevelop the site with STDM, and the parent firm would retain a majority stake in the project, originally set to begin construction this year.

The two parties 'do not intend to redevelop the Lisboa site for some time', Mr So said.