UPDATE 1-Macau casino firm SJM Q1 net profit up 12 pct

Mon May 6, 2013 5:36am EDT

HONG KONG May 6 (Reuters) - Macau casino operator SJM Holdings Ltd, controlled by the family of gambling tycoon Stanley Ho, posted a 12 percent year-on-year increase in first-quarter net profit, buoyed by strong interest from cash-rich Chinese gamblers.

SJM on Monday reported net profit of HK$1.9 billion ($240 million) for the first three months of 2013, compared with HK$1.7 billion a year earlier.

Macau, a former Portuguese colony, is the only place in China where citizens can legally gamble in casinos.

Gambling revenue in Macau, an hour from Hong Kong by ferry, has remained robust with each month raking in more than half of the Las Vegas strip's annual take of $6 billion. Macau is the only place in China where citizens can legally gamble in casinos.

Valued at around $14 million, SJM has the largest market share among the six licensed operators, with 27 percent.

SJM was the sole operator in Macau's lucrative gaming market for 40 years before the entry of foreigners including Las Vegas stalwarts Steve Wynn and Sheldon Adelson in 2004. It has managed to stay competitive, even as new resort properties open on Macau's Cotai strip.

Analysts said a 10 percent growth in gaming revenues for the first quarter was decent considering the operator was not present on Cotai.

The Cotai strip - a reclaimed stretch of land situated five minutes drive from the main peninsula where SJM has its 17 casinos - is fast becoming the centre of gaming in Macau.

Operators Sands China Ltd, Melco Crown Entertainment Limited and Galaxy Entertainment Group Ltd have been expanding their footprint there, drawing Chinese punters away from the peninsula.

SJM, which is expected to open a new casino on Cotai in 2016 pending government approvals, has the second highest cash balance among 170 casino and gaming companies globally at $3 billion, Thomson Reuters data shows.

Shares in SJM rose 2.5 percent on Monday and are up 10 percent since the start of the year. Like Macau gaming peers, SJM has continued to outperform the Hang Seng benchmark index which is up 1.1 percent in the same period.

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