SJM Holdings says it will transfer around 1,000 employees from peninsula property Grand Lisboa to its new Cotai integrated resort, Grand Lisboa Palace, as it prepares to launch later this year.
The company provided an update on progress at Grand Lisboa Palace to analysts during its 1Q20 earnings call on Tuesday, noting that construction of the HK$39 billion project was mostly completed in late 2019 with the company now waiting on government inspections and approvals.
As of today, SJM said it has spent HK$33 billion of its budget with the remaining HK$6 billion unlikely to be required until after opening and for the final payment of contracts, alleviating any added cash burn during the COVID-19 pandemic.
It added that moving 1,000 employees to Grand Lisboa Palace will also help improve its cost structure at Grand Lisboa where the company is currently “warehousing employees.”
Analysts reported late Tuesday that SJM has requested customary waivers from its banks in regards to its financial covenants for up to six quarters, similar to waivers already offered to other Macau operators.
Brokerage Sanford C Bernstein said that SJM “does not plan on cutting any local staff or reducing compensation at this point,” adding, “Management is very optimistic that Macau can get back to its prior levels but is uncertain around timing of recovery (which is dependent on when border restrictions lift). Social distancing rules will likely stay for some time. SJM is not too concerned as Grand Lisboa has enough space to accommodate any configurations needed.”
Union Gaming’s John DeCree said the investment bank was maintaining its Hold rating and HK$7 price target assuming a 1Q21 opening of Grand Lisboa Palace but added, “If the casino can open sooner and begin ramping, there would some upside to our 2021 estimates at this point.”
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