SJM’s decision to open its Cotai integrated resort, Grand Lisboa Palace (GLP), into the teeth of the COVID-19 pandemic continues to cause headaches, with the property contributing to another tough quarter for the company in 1Q22, according to industry analysts.
The Macau concessionaire reported late Tuesday gross gaming revenue of HK$2.54 billion (US$324 million) for the three months to 31 March 2022, 4.2% lower than the HK$2.65 billion (US$338 million) recorded a year earlier. Adjusted EBITDA loss also grew from HK$319 million (US$41 million) to HK$474 million (US$60 million), with loss attributable to owners of the company reaching HK$1.28 billion (US$163 million) – almost double the HK$647 million (US$82 million) loss in 1Q21.
Notably, GLP recorded GGR of just HK$156 million (US$20 million) of which HK$141 million (US$18 million) came from mass gaming tables and HK$15 million (US$2 million) from slot machines. Adjusted Property EBITDA was a loss of HK$216 million (US$28 million), not including pre-opening expenses of HK$132 million (US$17 million).
The results were, however, improved from the December 2021 quarter with Adjusted EBITDA loss narrowing by 22% sequentially and market share growing from 12.9% to 14.7%.
In a note, Bernstein analysts Vitaly Umansky and Louis Li said SJM is “still the only Macau gaming operator not to have achieved EBITDA break-even since Chinese visitation into Macau resumed in September 2020.”
They also observed that the market share gain was primarily achieved via improved sequential performance at peninsula property Grand Lisboa rather than at GLP – the latter gaining only 20 basis points of GGR share quarter-on-quarter to 0.9%.
“Opening into the current market has been tough and has led to continued cash bleed that will not let up in the near term,” they wrote.
In announcing its Q1 results, SJM Vice-Chairman and CEO Dr Ambrose So said, “Inbound tourism is still being profoundly impacted by the COVID-19 pandemic. Given our confidence, however, in the eventual recovery of Macau tourism and in SJM’s prospects for obtaining a new concession extending beyond 2022, we have continued to introduce additional elements in retailing and F&B at our new Grand Lisboa Palace, whilst focusing on cost controls and efficiency.”
The results included a 5.9% year-on-year decline in GGR at Grand Lisboa to HK$551 million (US$70 million), a 6.2% decline at other self-promoted casinos to HK$352 million (US$45 million) and a 12.4% decline at its satellite casinos to HK$1.48 billion (US$189 million).
