- GGR -37.9% YoY in Q3, -39.6% for the first nine months
- Adj EBITDA, -49.5% YoY in Q3 - HK$884M
- Adj EBITDA margin = 7.8% in Q3, down from 9.6% in Q3 2014
- GGR Share 22%
- Grand Lisboa
- GGR = -48.5% YoY, HK$3,450
- Adj EBITDA -49.2% YoY, HK$507M
- Challenging factors still persist, hurting opportunity for profitability
- Market may be stabilizing but they are not forecasting an upturn just yet
- Still remain optimistic on the long term prospects of Macau
- EBIITDA margin squeezed due to labor costs and lower volumes
- Corporate overhead hurt their satelite casinos EBITDA margins, and additionally cash rebates hurt EBITDA margins
- VIP remains unstable, currently have 454 VIP tables vs. 557 at beginning of the year
- VIP Tables at Grand Lisboa - 152 currently vs 177 at beginning of the year
- First Q in SJM's history where Mass revenue exceeded VIP revenue
- Occ up to 85% in the Q, visitation slightly up at most properties.
- Visitation at Grand Lisboa +7% in the Q, trends in October have been promising
- Cost savings associated with labor remains very difficult to attain in Macau
- Lisboa Palace on schedule for 2017 and in line with budget expectations
- CapEX HK$1.8 billion YTD, big CapEx year will be 2016 at roughly HK$17 billion
- Grand Lisboa VIP revenue -58% YoY
- Grand Lisboa Mass QoQ = -8%, YoY -21%
- Cost cutting efforts slowly begin to show some positive signs, but they have just been implemented so it will take time. Expect more cost savings to kick in the future.
- On the revenue side, it is difficult to guide because of the new supply that is coming on line
- Premium mass is growing, targeting a mid tier premium customer and opening a new premium mass pit in early 2016
- Total VIP Hold rate = 3.4% for the Q, normalized roughly 2.9%
- Financing for Lisboa Palace, expect to have more details in the future on bank financing
- Reasons for EBITDA decline despite stable revenues - mostly due to older properties and satelite casinos. Older properties cost of revenue is higher
- Junket color - difficult environment and tough to predict
- Do satelite casinos have chance to survive? Yes, customers are sticky at those properties, they will survive
- MSC - no comments on cannibilization but consider it a nice property
- Not aware of any changes in transit visa policies
- Comp room ratio, roughly 70% of the rooms go to casino players
- No update on Macau Theme Park land
- VIP Hold Rate at Grand Lisboa Q3 2014 2.88%, Q3 2015 3.24%
- Hold rates at all casinos were not the reason for weaker EBITDA margins, cash rebates were likely the driver of that.
- Confident in their abilities to remain competitive despite the new supply that has come online in Macau
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In a spirited economic debate on Fox Business' Mornings With Maria today, Hedgeye CEO Keith McCullough and Wall Street Journal Chief Economics Correspondent Jon Hilsenrath discuss whether the U.S. is headed toward recession.