SJM's net profit soars on high-stakes gambling

PUBLISHED : Wednesday, 18 May, 2011, 12:00am
UPDATED : Wednesday, 18 May, 2011, 12:00am


Macau casino operator SJM Holdings, controlled by the family of Stanley Ho Hung-sun, said net profit rose 85 per cent in the first three months of the year on surging high-stakes gambling volumes.

SJM booked sales of VIP gambling chips, a proxy for wagers, of HK$453.9 billion in the first quarter, up 57 per cent from a year earlier. The company's 18 casinos won and kept 2.81 per cent of those bets - in line with the industry average - down marginally from 2.87 per cent in the same period a year ago.

SJM's unaudited net profit rose to HK$1.407 billion in the first quarter, nearly double the HK$760 million it booked a year earlier and a 25 per cent rise from the fourth quarter of last year.

Cash flow, or adjusted earnings before interest, tax, depreciation and amortisation (ebitda), rose 53 per cent year on year and 18 per cent quarter on quarter to HK$1.68 billion. SJM's flagship Grand Lisboa casino hotel accounted for HK$882 million in ebitda, or 53 per cent of the company's total.

Ownership of SJM was the focus of a bitter family feud earlier this year among Ho's four families and 16 surviving children. A settlement agreement was reached in March that resulted in the ailing 89-year-old losing control of SJM, which he wielded via his previous controlling stake in unlisted Sociedade de Turismo e Diversoes de Macau (STDM). That private holding company owns 55.7 per cent of SJM, and Ho's 31.66 per cent stake in STDM was split up among his families as part of the settlement.

SJM's largest individual shareholder is now Ho's fourth wife, Angela Leong On-kei, who has an indirect, effective 12 per cent stake in the casino business.

SJM is a sprawling and increasingly lucrative franchise in Macau, despite Ho losing his gaming monopoly in 2002.

The company has the biggest share of gaming revenue among Macau's six licensed casino operators. SJM's gambling revenue at its 18 casinos (14 of which are franchised operations owned by third parties) rose 43 per cent from a year ago and 9 per cent from the previous quarter to HK$18.14 billion.

SJM now ranks as one of Macau's best capitalised casino operators, with HK$17.74 billion cash on hand and only HK$3.85 billion in debt.


The proportion of SJM's total casino revenue that VIP gaming accounted for last year