SJM 2Q CONFERENCE CALL NOTES
CONF CALL
- Reclassification of some premium mass tables into VIP
- 6-month interim dividend of 20 cents vs 10 cents last year
- Cotai: HK$423 capex in 1H 2013; HK$1.654 billion committed
- Commenced work on the renovation of the Jai Alai Palace building - new walkway to Casino Oceanus will be completed in 4Q 2014
Q & A
- Dividend policy: Doubled the dividend because they want to pay out at least 50%; present payout of dividend is sustainable.
- Jai Alai renovation: HK$600MM capex allocated (HK$100MM was spent in 1H 2013); currently planning one junket with 40 tables
- Staff costs up 16% YoY: +5% wage raises effective at beginning of year; higher bonuses, increase in non-gaming staff
- Grand Lisboa performance: VIP revenue -18%, mass revenue -1%; VIP volume: -1.8%; 2.69% win rate (excludes premium mass) (vs. 3.24% in Q1); had taken 10 VIP tables out of play but have put those back in play in Q3; July record chip sales; expect to see to improvement in premium mass (already seeing it this quarter).
- Hold: SJM 3.06%, Grand Lisboa: 2.95% (incl premium mass), self-promoted casinos: 2.89%
- Macau Legend HK$149MM investment: one-off gain; still hold shares in company in cash
- End of September: 6-8 more junket tables coming into Grand Lisboa; 12-16 more premium mass tables
- ROI on Oceanus: +40% on original investment of slightly over HK$1 billion
- 3rd party table count: drop in tables due to Greek Mythology
- Cotai One - land next to Macau Studio City: no development in the near future
- Old Lisboa: 60bps adverse hold impact, -4% VIP volume, mass revenue flat
- Cotai: waiting for construction permit; no comment on budget
