SJM Holdings is hoping the recent launch of a new centralized operating and service platform across all of its Macau properties can make it a local powerhouse once again.
Launched in late December, the “One Platform” initiative is designed to control operating expenses and improve cross-property synergies, SJM told analysts during its 4Q23 earnings call this week, with some promising early results in 1Q24 after narrowly missing both Q4 and FY23 revenue and EBITDA consensus.
Of particular focus for SJM by way of “One Platform” are the company’s nine satellite casinos, which continue to lag the SAR’s integrated resorts and as such contributed to SJM’s market share falling to 12.2% in 4Q23, down from 14.8% in 4Q19.
“The new concession environment has further shifted the center of gravity away from these legacy properties in multiple ways, including through the elimination of most junkets, concentrated investment at larger resorts on Cotai, and an increasing focus on non-gaming and international mass market customers,” said CBRE analyst John DeCree in a Thursday note.
“While the operating environment shifted sharply, SJM has been unable to adjust in tandem and incurred HK$617 million of excess costs related to satellites in FY23, including HK$132 million in 4Q23.
“The company is making changes to reposition these casinos through integration with the company’s new centralized operating and service platform aimed at boosting efficiency and demand. Management spoke to promising results under its ‘One Platform’ so far into 1Q24.”
According to DeCree, management also expects “One Platform” to aid the improving performance of its Cotai IR, Grand Lisboa Palace (GLP), which in positive news for the company produced its first profitable quarter in Q4 with EBITDA of HK$2 million on the back of 11.8% quarter-on-quarter GGR growth.
SJM said that visitation to GLP is up 12% and non-rolling volumes up 25% through the first two months of 1Q24 when compared with 4Q23.
“Management noted that the platform has delivered a 29% increase in labor productivity compared to 2019 (same store excluding GLP),” DeCree wrote. “SJM expects the new initiative will improve company-wide margins by 2% to 5%.
“On the revenue side, cross-selling customers can help plug the gaps at different properties and improve customer monetization. For example, filling hotel rooms at GLP with gaming customers from Grand Lisboa. SJM reported that since launch, the platform has referred almost 100 customers per day from Grand Lisboa to GLP without cannibalization.”
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