Macau casino operator SJM falls short of market expectations with 16.5pc profit drop in third quarter

Analysts say the company’s fortunes may improve in 2018 with Beijing’s push of the ‘Greater Bay Area’ scheme and regional infrastructure projects coming on stream

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Macau’s gross gaming receipts rose for the 14th month in September by 16 per cent to US$2.7 billion, according to data released by the Macau Gaming Inspection and Coordination Bureau. Photo: Reuters

Published: 8:50pm, 31 Oct 2017Updated: 11:43pm, 31 Oct 2017

SJM Holdings, one of Macau’s six major casino operators, posted a 16.5 per cent slump in its third-quarter net profit from a year ago, squeezed by declining revenue in its mass market gaming business.

The net profit of HK$428 million (US$54.8 million) for the quarter missed the HK$496.5 million consensus estimate by analysts polled by Bloomberg. The net profit for the nine months ended in September was also down 14.1 per cent on the year to HK$1.38 billion.

While the company saw the return of its high rollers on the back of a 7.4 per cent rise in revenue from the VIP segment to HK$4.73 billion in the quarter, revenue from its mass market gaming business declined.

Revenue from mass market gaming and slot machine segments slid 4.6 per cent and 7.7 per cent to HK$5.04 billion and HK$251 million respectively in the third quarter, compared with a year ago.

But with time, SJM’s fortunes would change, analysts say, as well as those of its five rivals – Sands China, MGM Macau, Wynn Macau, Galaxy Entertainment and Melco Crown, thanks to Beijing’s push of the ambitious ‘Greater Bay Area’ initiative that is likely to give the city’s gaming revenues a boost in the coming years.

The planned 56,500-square kilometre area is aimed at connecting Hong Kong, Macau and nine cities in the southern Guangdong province into an integrated economic and business hub.