Inside Asian Gaming

June 2014 inside asian gaming 43 SJM Hits US$2.84B in Q1 Gaming Revenue Macau casino giant SJM Holdings reported a 2.9% increase in EBITDA to HK$2.19 billion for the three months ended 31st March (US$283.8 million) as gaming revenues increased 4.9% to HK$22.78 billion ($2.84 billion). Net income year on year was down 1.9% to HK$1.87 billion, reflecting share-based payments of $106 million. Excluding those, profit would have been up 3.6%, the company said. Mass-market table revenue was up 27.8% over the prior year quarter, and VIP was down 4.1%. But the comparisons reflect a reclassification in Q1 2013 of more than HK$1 billion in high-limit premium-mass revenue as VIP. Without the adjustment, the quarter would have been up 10% on mass revenue and 2.7% on VIP. VIP rolling chip sales actually grew 17% year on year. But the rate of hold was lower, 2.7% versus a luckier 3.08% in Q1 2013. The quarter saw publicly traded SJM (HKSE: 0880) accounting for 23% of Macau’s world-leading US$12.8 billion in gaming revenue through the end of March. That is down from 26% in Q1 2013 but good for a close second to Sands China (HKSE: 1928) among the market’s six concessionaires. It was derived from three wholly owned and operated casinos and a machine gaming venue and 14 properties owned by third parties whose casinos operate under SJM’s gaming concession in exchange for a share of revenues. (One of the latter, Casino Ponte 16 on Macau’s Inner Harbour, is 51% owned by SJM.) The company’s own casinos, all of which are located on the Macau peninsula, accounted for 50% of group gaming revenue in the quarter and 73.3% of EBITDA, and most of it (36% and 53%, respectively) was generated by the flagship Casino Grand Lisboa. The quarter was notable as well for the start of construction of Lisboa Palace, which will be the first foray into the booming Cotai resort district for the company founded by Stanley Ho to succeed the casino monopoly he held in Macau for four decades. Scheduled to open in 2017 at a cost of US$3.9 billion, plans for Lisboa Palace call for 2,000 five- and six-star hotel rooms, 700 table games and 1,200 machine games. SJM ended the quarter with an average of 582 VIP tables, 1,195 cash tables and 2,971 slots and other machine games. China Issuing Online Betting Licenses for World Cup Chinawill issue licenses to the country’s sports lottery operators to offer World Cup betting products online ahead of football’s biggest event. A Chinese news agency initially claimed no licenses would be forthcoming, but a Ministry of Finance official has since clarified that while no official licenses had been issued to date, the online operations of several companies had been given tacit approval. This was confirmed by the Hong Kong Economic Journal , which reported that formal licenses were on the way, with the first batch to go to companies already offering online sales under an MOF pilot program. As it will elsewhere, the kick-off of the World Cup in Brazil this month is expected to generate significant betting action in China. Sports lottery sales doubled during the 2010 World Cup. The Euro 2012 tournament boosted sales 150%. Total sales for the country’s officially sanctioned Sports and Welfare lotteries topped RMB309 billion in 2013 (US$51 billion), an 18.3% gain over 2012, and analysts expect the online sports lottery market will double in value by 2015. Earlier this year, the State General Administration of Sport expanded the betting options, previously restricted to football and basketball, to include badminton, volleyball, hockey, tennis, table tennis, handball and water polo. The changes took effect in April, beginning with the Beijing, Guangdong and Tianjin lottery administration centers. Vietnamese in Sights of New Cambodia Casino A new casino has opened on Cambodia’s border with Vietnam about 87 kilometers from Ho Chi Minh City. The offering at the Roxy Casino in Bavet City in Syay Rieng Province consists of 20 live table games, two multiplayer electronic roulette tables, slot machines, sports betting, a small hotel (20 rooms) and a 50-seat restaurant on a total land area of 2,700 square meters. “Vietnamese locals are the most important market,” its owners, ASX-listed Cell Aquaculture (CAQ), said in a statement released 26th May. “Marketing programs and promotions are created to tap into this primary market, including attracting junkets from Vietnam.” Online gamblers “also form an important market for the casino,” principally those in Vietnam, the company said, and the Roxy also features eight table games accessible remotely via PC and mobile. Cell Aquaculture, a seafood farming and processing company based in Australia, acquired the casino in March for A$83 million in stock from a consortium engaged in commercial property development in the Haikou Free Trade Zone on China’s Hainan Island. One of the sellers is Hong Kong-listed Beijing Properties (Holdings) Limited. The deal includes various properties in the FTZ. Cell Aquaculture posted an operating loss of A$1.3 million and a net loss of $200,000 on $1.9 million in revenues for the financial year ended 30th June 2013. Current trading shows a market cap of about A$44 million. REGIONAL BRIEFS Rendering of SJM’s upcoming Cotai resort, Lisboa Palace