Seven casino closures deliver final blow on SJM FY22

An eventful year for the operator was compounded after it closed five of its “satellite” casinos – which are third-party promoted casinos – and two self-promoted casinos on 27 December 2022.

The satellite casinos were Casino Babylon, Casino Diamond, Casino Golden Dragon, Casino Million Dragon and Casino Royal Dragon.

Revenue for self-promoted casinos in 2022 fell by 41.9% to HK$3.78bn for the full year.

SJM operated 14 satellite casinos in 2021. The operator noted that from 31 December 2022, it operates nine satellite casinos.

The two closed self-promoted casinos were Casino Eastern and Casino Tapia. Self-promoted casino revenue was reported at HK$1.25bn for the year, down by 15.9%

The 12-month period had been somewhat chaotic elsewhere. In May, it agreed to acquire the Casino Oceanus property from its parent company, Sociedade de Turismo e Diversões de Macau. This was so that SJM could fulfil the requirements needed to apply for a gaming concession in Macau.

SJM applied for one of six concessions in September. The new concession process came about as part of an attempt to reform gambling in Macau.

SJM, alongside MGM Resorts International, Galaxy Entertainment Group, Las Vegas Sands, Melco Resorts and Wynn Resorts, won the six concessions. The Macau government signed contracts with the operators in December.

In August, SJM announced that it would raise HK$5.03bn in the form of a share issue and a loan from its parent company. This came after the operator announced a 75% drop in H1 revenue, compared to pre-pandemic levels.

Full results

Net gaming revenue alone was HK$6.09bn, down by 36.6% year-on-year.

Before operational costs were factored in, SJM suffered a cost of HK$2.68bn in special gaming tax, special levy and gaming premium. This was a HK$1.50bn difference yearly.

The most significant cost of the period was HK$8.47bn, from operating and administrative expenses. This increased by 1.2% yearly, a fairly unremarkable difference.

Impairment loss on property and equipment – with no comparable figure from 2021 – was HK$1.21bn.

Finance costs jumped significantly. The total came to HK$1.12bn for 2021, a rise of 227%.

This was due to rocketing gaming operations costs, which went from HK$321.4m to HK$1.08bn year-on-year. Hotel, catering and retail and leasing operations costs at HK$16.6m, along with corporate-level costs at HK$18.7m, made up the remaining total.

Despite income in the form of other income, gains and losses at HK$36.2m, along with share of profits of joint venture at HK$3.6m, the range of remaining costs brought the loss for the year before tax to HK$7.78bn.

Taxation at HK$61.1m brought the total loss to HK$7.84bn, 86.9% higher than in 2021.

Property operations

Turning back to net gaming revenue, a grand majority of the total came from mass market table operations at HK$5.55bn. Revenue from VIP gaming operations fell sharply, by 64.2% to HK$486.3m.

Revenue from slot machine and other gaming operations was HK$416m.

The total net gaming revenue was reached after factoring in commissions and expenses at HK$362.1m.

SJM's Casino Grand Lisboa accounted for HK$1.06bn in revenue, a drop of 50.4% year-on-year.

Satellite casino revenue was HK$3.78bn.

An additional HK$1.25bn in revenue was generated by what SJM labels as “self-promoted” casinos.

These casinos consist of Casino Lisboa, Casino Oceanus at Jai-Alai and Jai-Alai Hotel and other non-gaming areas.