Macau casino operator SJM Holdings has again pushed back the timetable for finishing its US$4 billion-plus Grand Lisboa Palace on Cotai.
It’s also going to cost more.
SJM announced with its first-half earnings report that construction of the luxury resort complex won’t be completed before March 2020 and won’t open until later that year.
The company also has upped the price tag by around 8 percent over previous projections, from HK$36 billion to $39 billion (US$4.87 billion)
Featuring 1,900 rooms and suites in three hotels𑁋two of them with the Versace and Karl Lagerfeld brands𑁋the resort will also include a proposed 700 table games, a theater, a wedding pavilion and an array of restaurants and cultural attractions. SJM’s much anticipated entry into the competition on Cotai was unveiled five years ago with a cost estimate of US3.8 billion and a scheduled 2017 opening.
SJM, the Hong Kong-listed successor to the casino monopoly held for decades by industry tycoon Stanley Ho, is the only one of Macau’s six gaming operators without a presence on Cotai. No reason was given for the latest delay, but it isn’t inspiring confidence in investors. The company’s stock fell more than 5 percent on July 26 after Bloomberg reported the company was seeking a loan waiver to extend the completion and opening dates. It dipped another 2.8 percent the following Monday, July 29, according to news reports.
“Over the past five years, SJM’s market share has fallen from over 23 percent to a historic low of 14 percent,” brokerage Sanford Bernstein said in a May client note. “SJM has very limited presence in the critically important premium mass segment and (Grand Lisboa Palace) will not be the panacea to cure that ill.”
Comprised of four wholly operated casinos and 16 run by third parties under various service agreements, SJM as a group posted gaming revenue of HK$16.72 billion (US$2.09 billion) in the first half, down 0.7 percent from the same period last year, driven mainly by a 25 percent drop in VIP revenue, partially offset by 8 percent growth from mass-market table games. Slot machine and other gaming operations were down 1.2 percent.
The declines were accompanied by lower costs, and adjusted EBITDA was up 6.1 percent to HK$2.08 billion ($260 million). Net income was up 12 percent to HK$1.68 billion ($210 million).
The company declared an interim dividend of HK$0.08 per share.
