Home Macau SJM’s slowing profits not impacting investment

SJM’s slowing profits not impacting investment

SJM Holdings has reported its slowest growth in profits since 2009, but this hasn’t prevented Stanley Ho’s group from investing $480 million in a new entertainment development in Macau.

Macau's Fisherman's WharfProfits in-line with predictions

SJM, which is owned by Stanley Ho and is Macau’s largest casino operator, declared profits of HK$ 3.41 billion (US$ 439.72 million) for the first half of 2012. This was an increase of 28% over the same period in 2011.

Although this was in keeping with SJM’s projections, it was nevertheless the slowest profits have grown for the group since the financial crisis of 2009. But although things are slowing down, there were still signs for encouragement.

VIPs down, families up

One reason for this slowdown is a decline in the number of VIPs from the Chinese mainland visiting Macau. China’s slowing economy has made it trickier for VIP players – who typically account for as much as 70% of Macau’s gambling revenue – to raise the credit required to play. As a result, SJM reported that revenue from its VIP sector actually dropped 0.5% over the period.

However, SJM Holdings was able to find growth in other markets, most notably among the Chinese middle-classes, whose growing wealth now means they’re able to consider visits to territories such as Macau. And as research conducted by this site has show, the general outlook for Macau's casino sector remains positive.

Continued investment

Nor has this slowdown in profits deterred SJM from pursuing new opportunities. The group has also announced that it has taken a HK$ 480 million (US$ 62 million) stake in Macau legend Development.
Macau Legend Development merged with Macau Fisherman’s Wharf International Investment Ltd in May, and SJM now holds 4% of the new company.

The company is planning a HK$ 5 billion (US$ 644 million) redevelopment of the Macau’s Fisherman’s Wharf district. Alongside any direct benefit from this investment, it could also open up the prospect of SJM developing its own casinos there – potentially in response to the new Western-style casinos emerging on the Cotei Strip.