Background
SJM
Holdings Limited is the holding company of Sociedade de Jogos de Macau S.A.
("SJM"), one of the six companies authorised to operate casino games
of fortune and other games of chance in casinos, under the terms of a
concession granted by the government of the Macau Special Administrative Region
in March 2002. SJM is the only casino gaming concessionaire with its roots in
Macau, and is the largest in terms of gaming revenue and number of casinos.
SJM's casinos are located in prime locations on the Macau Peninsula
and Taipa Island and convenient to principal entry points. Gaming operations
are comprised of VIP table gaming, Mass Market table gaming and slot machines.
Overview
- In 1Q13, SJM recorded gaming revenue of HK$21,734M, up 10.4% YOY. Adjusted EBITDA grew 11.2% YOY to HK$2,129M. Profit attributable to owners grew 11.8% to HK$1,915M.
- The gaming revenue accounted for 26.2% of Macau’s casino gaming market in 1Q13, down from 26.7% at the end of 2012.
- In 1Q13, VIP gaming revenue increased 13.4% YOY to HK$15,137M. Revenue from mass market gaming business was up 4.7% YOY to HK$6,220M and the slot machine revenue declined 4.2% YOY to HK$377M in 1Q13.
- The gaming revenue from Casino Grand Lisboa amounted to HK$8,327M, up 24.0% YOY and accounted for 38.3% of the total.
Suggestion
- P/E ratio is 17.6x and P/B is 6.28x.
- 2012 ROE: 36.4%
- Currently valuation is moderate.
- We maintain BUY and HOLD rating on this counter.
Development of Cotai
land
In 2012, SJM obtained the right to lease the land
parcel with the area of 70,468 square meters in Cotai with an initial term of
25 years. SJM intends to build a casino gaming resort on theCotai Land. The resort may add
another 700 gaming tables and 1,000 slot machines as well as 2,000 hotel rooms
to SJM, which is subject to the approval of the authorities.
Income Statement
