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Takeaway: Down across the board. SJM Palace on track for 2017 opening.


  • GGR down 40.3% YoY in 1H of 2015
  • EBITDA down 49.1% YoY 
  • Profit down 54.1% YoY
  • EBITDA margin down 8.5% YoY 
  • cost of labor increasing
  • Mass GGR down 26.8% YoY
  • VIP down 48.7% YoY
  • Slots down 12.3% YoY
  • Share of Macau GGR stood at 22.3% YoY 
    • 25.5% of Mass Mkt share 
    • 21.2% of VIP
  • Grand Lisboa 
    • GGR down 43.5% YoY 
    • EBITDA down 49.6% YoY
    • Profit down 53.3% YoY
    • OCC down 15.2% YoY
    • ADR up 2.3% YoY
  • Dividend of HK10 cents p/s was declared 
  • Challenging conditions in the market place and regulation to blame for the slow down in GGR. Tough to pin point where the bottom is. 
  • They remain optimistic on the Chinese economy, which will continue to drive GGR in the future. 
  • Junket closure and downsizing common theme, and could continue. 
  • OCC down due to VIP business decline 
  • New system has been deployed to sell rooms which has driven OCC in July. focus shift to mass and premium mass player has aided the uptick in OCC. 
  • Confidence remains very strong. Lisboa Palace is well underway. Foundation work is nearly fully complete. 
  • Cost control initiatives have already started. 
  • CapEX HK5.9billion in 2015, due to the opening of Palace. 
  • Major focus to still return capital to shareholders despite the challenging market.
  • Always looking to shift tables, feel that they have some opportunity to shift around more tables in 2H. 
  • Adding 11-14 tables for mass segment in Q4. 

Q & a 

Quantify the cost savings going forward?

  • Annualized savings are roughly HK50 million. Mostly due to labor attrition and decrease in headcount.

OCC up in July? To what levels? 

  • Targeting close to the high 80's low 90's 
  • Infrastructure is in place to accommodate the mass customers

CapEx tied to construction of SJM Palace? Plan with Adjacent properties?

  • Not a focus right now. Simply focused on finishing the SJM Palace.

Hold adjusted EBITDA for the Q?

  • No, do not have it calculated. 

Cost cutting measures? Potential in the future for more cost cutting vs. the competitors that are opening sooner than you? 

  • SJM pure gaming company, do not have a lot of non gaming initiatives that they can cut. 
  • Not replacing some of the labor they lost to attrition has been the opportunity to reduce costs. Might see more potential for this in the future, but it is not a focus.

Are you more socially responsible than your competition?

  • Yes, they feel as though need to remain a paternalistic employer. Many 2nd generation employees and even 3rd generation employees. 

Premium mass and base mass are outperforming competition through the summer

CapEx to peak in 2H and into 2017, what does that do to the dividend?

  • Dividend policy still stands, regardless of additional CapEx. 

Transit visa loosening, a tailwind?

  • Yes, starting to see stronger trends in July and August, especially on the mass and premium mass segment.