arnings before interest, taxes, depreciation and amortization fell relative to sales in the third quarter compared with the first half, Citigroup said in a note to clients this week.
Gaming revenue in Macau, the only place in China where casinos are legal, rose 45 % to us$ 27.6 billion in the first 10 months of the year. Competition is intensifying in the world’s biggest gambling strip, as rivals including Galaxy Entertainment Group add casinos. Sands China today reported an 11 % increase in third- quarter revenue.
“It’s almost certain that SJM will lose market share going forward,” said Philip Tulk, an analyst at Royal Bank of Scotland Group in Hong Kong. “It has been hugely impacted by the opening of Galaxy.” SJM’s Ebitda missed Tulk’s estimates by 6 %.
SJM, at the heart of an ownership dispute earlier this year between billionaire founder Stanley Ho and members of his family, fell 3 % to close of trading in Hong Kong. The stock has advanced 15 % this year compared with a decline of 15 % in the benchmark Hang Seng index.
The margin for adjusted Ebitda was 8.7 % in the third quarter, down from the first half, Citigroup analysts George Choi, Anil Daswani, Michael Beer and Raymond Choi said in a report. Slower profit gains suggest that SJM has “lost significant market share,” they said. SJM said in August that it would face competition this year and next with casinos opening on Macau’s Cotai Strip.
Galaxy opened its us$ 1.9 billion casino resort on Macau’s Cotai Strip in May. Sands China, the Macau unit of casino magnate Sheldon Adelson’s Las Vegas-based company, plans to open the first phase of a project early next year in the same area, where the billionaire has said he aimed to replicate the theme sorts of the U.S. gambling hub.
Sands China’s third-quarter revenue rose to us$ 1.2 billion while net income climbed 41 % to us$ 281 million, the company said in a filing today. About 85 % of Sands China’s third-quarter sales came from the casino business. The Venetian Macao contributed more than half of revenue in the period. Sands China dropped 3.4 percent, paring its gain this year to 41 percent.
SJM said revenue from the biggest-spending gamblers jumped 42 % in the third quarter to us$ 1.7 billion, outpacing the 36 % gain in total sales to us$ 2.4 billion.
Revenue at Casino Grand Lisboa increased 60 percent to us$ 750.3 million in the quarter, according to the statement. The Grand Lisboa Hotel had an average occupancy rate of 95 percent at an average room rate of us$ 259.3 a night during the quarter, compared with a 78 occupancy rate at us$ 243.1 a year earlier. The company’s gambling revenue accounted for 28 percent of Macau’s casino market during the quarter, compared with 30 percent a year earlier.