SJM Holdings Loses $189.2 Million in Third Quarter

Macau is the world’s largest gambling but even its casinos are seriously struggling in the current climate. SJM Holdings posted a financial update to investors this week and the figures are awful.

The COVID-19 pandemic has decimated company revenues around the world. The leisure sector, which casinos and hotels come under, is one of the worst hit. Australia’s gambling industry is the fifth-worst affected on the planet. Macau is one of the four economies that is worse off.

SJM Holdings is one of the biggest operators in Macau. It operates 20 casinos around the world with a combined 1,040 gaming tables and 1,080 pokies. Casinos make huge sums of money. The larger venues are essentially licensed to print money and make astronomical profits. That is when they actually have customers gambling and using their hotel rooms.

This isn’t happening in Macau and SJM Holdings is feeling the effects. Financial figures show SJM Holdings generated revenue of only HK$879 million ($161.2 million) in the three months ending September 30. Revenue for the same period in 2019 was HK$8.06 billion ($1.48 billion).

A lack of revenue results in a lack of profit, or a huge loss in the case of SJM Holdings. The company booked a net loss in excess of HK$1.03 billion ($189.02 million). Compare this to the HK$782 million ($143.51 million) profit from the same quarter last year.

Q3 Losses Another Blog on SJM Holdings Balance Sheet

This is a dreadful year for SJM Holdings. Revenue for the first nine months fell 79.4% on a year-on-year basis to HK$5.1 billion ($936.03 million). SJM Holdings’ losses for the year to date weigh in at HK$2.44 billion ($447.76 million).

Casinos and hotels only make money if customers are using the facilities. The ongoing COVID-19 pandemic and the various restrictions caused by it are keeping customers away.

Grand Lisboa Hotel is the company’s flagship property. It is usually packed with tourists and gamblers 24-hours a day seven days per week. Q3 in 2019 saw the average hotel occupancy weigh in at 91.3%. Each room averaged HK$1,516 ($278.20). This occupancy plummeted to a mere 5.1% in Q3 2020 at an average rate of HK$1,695 ($311.06).

The interim report wasn’t all doom and gloom. SJM Holdings finally completed its Grand Lisbao Palace property, according to the financial statement. The much-delayed complex is the company’s first venue on the Cotai Strip. There is still paperwork to sort out and red tape to cut, but it finally opens in Q1 2021.

Tourists are returning to Macau according to the Macau Government Tourism Office (MGTO). The MGTO reports on the province’s tourism figures in minute detail. Market-wide occupancy rose to 40% in October, up from 16.4% in September. This is because of relaxed travel restrictions in Macau and surrounding areas.

Ambrose So Shu Fai, Vice Chairman and CEO of SJM Holdings, is confident of Macau’s glory returning.

“We firmly believe that the unique attractions of Macau, combined with the successful response to this year’s challenges by the Macau Special Administration Region and Central People’s Government, will fuel Macau’s resumed development into a global center of tourism and leisure.”

Pansy Ho Faces a Huge Battle To Turn Around Company’s Fortunes

Facing huge losses and plugging the leaks being out of control of the SJM Holdings directors is a bad enough position to be in, but they have to turn around the company’s fortunes without their talismanic leader.

Stanley Ho, founder of SJM Holdings, died in May. He was 98-years-old. Ho stepped away from the day-to-day running of the company several years ago due to ill health. His death handed the reigns to Pansy Ho, the eldest daughter from his second wife.

The battle for the $5.85 billion estate is quiet right now but it won’t stay that way for long. The Ho family is known for its years of in-fighting and it is only a matter of time before another lawsuit hits.

Several members of Stanley Ho’s family stakes claims for a slice of SJM Holdings within days of his death. The family is staying out of the media spotlight for now, but it won’t last.