Inside Asian Gaming

INSIDE ASIAN GAMING | April 2010 40 Briefs Regional Briefs market share to 29.4% from 26.5% in 2008. No “critical mass” on Cotai says SJM SJM will hold back its plans to build a resort on Cotai because a “critical mass” of venues hasn’t yet been reached, said SJM’s Chief Executive Ambrose So in comments to Dow Jones Newswires. “We think that the critical mass hasn’t grown to such an extent that would warrant our investment there,” stated Dr So. He added that the recent ill health of SJM’s founder Dr Stanley Ho would not affect the management and strategic direction of the company. “One thing we have to separate is ownership and management,” stated Dr So.“Ownership is within his family. Management—we have independent directors and we have professionals running the casino operation.” Dr So added that new service agreements with third-party operators signed last year, under which the service providers rather than the company bear the casino operating expenses of some SJM- licensed casinos, will probably improve the company’s profitability this year. He said themore favourable terms could contribute HK$500 million to HK$600 million in net profit for the company this year. Melco loss outstrips analysts’ expectations The 2009 net loss of Melco International Development Ltd—a joint venture partner with Crown Ltd of Australia in the Macau casino market—was 77.8% higher than that forecast by a Thomson Reuters poll of eight analysts. Hong Kong-listed Melco, controlled by Lawrence Ho, a son of Macau gambling entrepreneur Dr Stanley Ho, said its loss for the 12 months ended 31st December totalled HK$1.45 billion (US$190 million). Analysts had predicted a net loss of HK$815.36 million. On the plus side however, the net loss for 2009 did narrow 38.5% compared to 2008’s net loss of HK$2.36 billion Melco’s revenue for 2009 rose 2.7% to HK$709.6 million from HK$690.9 million. Macau’s gross gaming revenue rose 9.7% in 2009. Melco’s earnings were reportedly hit by a slowdown in VIP business at Altira Macau, the high roller focused casino operated by Melco Crown Entertainment (Nasdaq: MPEL), the JV company in which Melco has a stake. MPEL cancelled its contract with Amax Holdings Ltd’s majority-owned AMA International last year following the Macau government’s decision to cap junket commissions at 1.25%. AMA, which acted as a middleman between the casino and junket agents, had previously earned a 1.35% commission from the casino operator. Viva—not in it for the long haul Macau’s government has ordered cancellation of the operating contract for budget air carrier Viva Macau. SJM’s 2009 share of VIP market below Macau average Dr Stanley Ho’s casino operating company SJM Holdings had the largest market share of gross gaming revenue (GGR) in Macau during 2009 according to annual results released to the Hong Kong stock market. But the contribution of VIPs to SJM’s 2009 gross was below the market average for the year. SJM’s VIP gaming revenue rose 25% to HK$20.02 billion (US$2.58 billion) during the year, but it accounted for only 59% of the company’s gross gaming revenue (GGR). The high roller segment across Macau as a whole accounted for 66.8% of GGR during 2009 according to figures collected by Macau’s gaming regulator the DICJ. Given however that the margin on mass table play is much higher than the margin on VIP table play, it seems SJM successfully traded volume for margin. SJM Holdings reported a 14% rise year on year in net profit in its annual results for 2009. Most of the gains were made in the second half of the year. In the first half of 2009 the company recorded a 41% fall in net profit year on year due to the combined effects of global economic downturn on China’s manufacturing and credit sectors and restrictions on the number of China-to-Macau visas granted by the mainland government SJM’s net profit for the 12 months ended 31st December was HK$ 906.7 million (US$116.8 million), up from HK$796.1 million a year earlier. The 2009 net profit was 4.21% higher than that forecast by a poll of eight analysts. SJM reported a 22% year on year rise in GGR during 2009 to HK$34.07 billion. That helped the company improve its Macau GGR Grand Lisboa Melco’s CEO Mr Lawrence Ho