Dr Stanley Ho says the balance sheet of his casino operating company SJM Holdings is solid, despite the global economic turmoil.
“We are all aware of the impact that the current economic situation is having on Macau and the gaming industry, but SJM’s strong financial position and our prudent steady growth strategy has left us well placed to weather this storm,” Dr Ho said in comments reported in the Hong Kong press.
“Our development plans are moving ahead as scheduled and we will come through these times stronger than ever,” he added.
SJM received considerable criticism over the summer for launching a public share offering that many market commentators regarded as a ‘too little too late’. It raised only around half the USD1 billion analysts had thought the company was worth even six months earlier. In the light of subsequent world events however, SJM’s limited exposure to new commitments regarding shareholder dividends, its low levels of debt and the fact it is one of only two casino operators in Macau currently turning a profit for shareholders (the other being Wynn Resorts) means SJM now looks like a prudently managed company with strategic planning of the highest order. The fact that some of this good fortune may be down to what the Americans call ‘dumb luck’ is unlikely to stop SJM’s management from claiming all the credit.
SJM recently opened a new 430-room hotel tower attached to its HKD$7 billion Grand Lisboa site—across the road from the original Lisboa Hotel and casino on the Macau peninsula.
SJM will also operate a franchise casino at the L’Arc Macau, a property on Macau peninsula opening in the first half of 2009. The casino, hotel and residential project is being jointly developed by Dr Ho’s wife, Angela Leung, and International Entertainment, a company listed on Hong Kong’s alternative share index known as the Growth Enterprise Market (GEM). International Entertainment is controlled by the family of New World Development chairman Cheng Yu.
SJM is developing Oceanus, a HKD1.1 billion SJM owned-and-operated casino on the site of the former New Yaohan department store opposite the Macau Maritime Terminal on the peninsula. Oceanus will be opened in stages, with 300 mass-market gaming tables available by the end of 2009.
The company’s chief executive Ambrose So is confident SJM can square the circle of expanding operations while at the same time controlling day-to-day costs. Methods to achieve this include transferring existing staff to new sites as they are opened, rather than recruiting new people.
Mr So said the recent troubles experienced by competitors in Macau were because some had “overleveraged, over-borrowed and over-projected the market”.
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