HomeNewsMacauExcess satellite casinos labour expenses dragging down SJM results - Brokerage

Excess satellite casinos labour expenses dragging down SJM results – Brokerage

-

Elevated labour expenses related to satellite casinos remain an “area of weakness” and a drag on results for gaming concessionaire SJM Resorts, a dispatch by CBRE warned.

SJM Holdings Limited has announced robust interim results for 2023, with net gaming revenue climbing to HK$8.69 billion ($1.1 billion) in 1H23, representing a significant 128.2 percent year-on-year increase.

Still, the operator maintained HK$1.3 billion ($161 million) in company’s loss attributable to owners, which CBRE analysts attributed to “five discontinued satellite casinos and overall reduced VIP volumes”.

Under the new gaming law regulations enforced at the beginning of this year, local satellite casinos were required to operated under properties owned by the casino concessionaires. The changes forced concessionaires to reshuffle their previous indirect management agreements for satellite casino operations, with a three-year period granted until 2026 for them to reorganize their business.

Of the 18 satellite casinos in operation, before the new regulations were approved, a total of 14 casinos are under the umbrella of SJM, while the other four are under Galaxy and Melco Resorts. SJM made assurances to guarantee the jobs of any workers who find themselves unemployed due to the closure of any of its satellite casinos in Macau.

“Management continues to look for ways to reduce this cost burden by redeploying the staff across its other properties, namely Grand Lisboa Palace. Satellite casino headcount shrank from 2,700 at the end of FY22 to 2,100 at the end of 2Q23 and is expected to decline further. However, management reported it could take until the end of 2025 to fully normalize labor,” CBRE noted.

The consultancy underlined that SJM’s satellite casinos reported an EBITDA loss of HK$103 million ($13.1 million), which offset the good results reported by Grand Lisboa Palace and Grand Lisboa.

However, when adjusted for excess labor costs from five discontinued SJM satellite locations, satellite casinos under the operator reported a positive HK$67 million ($8.5 million).

As for Grand Lisboa Palace, CBRE pointed out that the recent opening of The Palazzo Versace and The Karl Lagerfeld hotel towers, will help drive premium customer visitation, with overall occupancy expected to increase to more than 90 per cent in the third quarter of this year.

AGBrief Editorial
AGBrief Editorialhttps://agbrief.com/about-asia-gaming-brief/
The AGBrief Editorial Team is a group of contributors living around the world that are connected to Asia Gaming Brief. They are active members in pursuing the sources of our news, making them reliable and accurate for our readers.

CORPORATE SPOTLIGHT