Inside Asian Gaming

March 2014 | INSIDE ASIAN GAMING 27 COVER STORY what’s going to happen tomorrow, and that includes Cotai. But Cotai is like four, five years away for these guys instead of one year for Galaxy, one and a half years away for Melco, and so on. It reflects all these things. It also reflects growth, that slower growth profile. They’re growing, but they’re not growing as fast as the market.” Writing last month, Mr Choudhary took the converse view that investors should “overweight” on the shares: “We believe SJM is a value play on the Macau sector, which is growing at a very healthy rate driven by strong demand from mainland and benefits from oligopoly. …With the Cotai project expected to start construction in 1Q14, stronger 4Q13 QoQ, moving 30 tables to Grand Lisboa (1H14), opening of Jai Alai hotel (by November 2014) and valuation discount versus peers, the stock price should move higher this year.” Analyst Kenneth Fong, writing for J.P. Morgan on the day of the groundbreaking, wondered if the ceremony later that day “may redirect market attention back to this underperforming name”. It didn’t. The stock has been trading, at any rate, at the upper range of its 52-week high of HK$28. The release of Q4’s results saw volume almost double at one point (on 27th February, the price jumped 2.4% before closing roughly at where it opened). Heading into March it was up all of 2.8% since Lisboa Palace was unveiled. “A lack of space at core properties and an insufficient number of hotel rooms make it hard for SJM to compete for new business,” says Standard Chartered analyst Phlip Tulk, with the result that the company has become overly reliant, in his view, on cash rebates to lure higher- spending play to its mass-market tables, the prized segment known as “premium-mass,” a strategy that he sees knocking margins around by 12-15% compared with non-rebated premium mass.