HONG KONG Macau casino SJM Holdings Ltd (0880.HK), controlled by the family of gambling tycoon Stanley Ho, posted a 12 percent rise in first-half net profit thanks to solid demand from gamblers eager to bet in China's only legal casino hub.
SJM's net profit for the six months to June totaled HK$3.8 billion ($487 million) versus HK$3.4 billion a year earlier. That was slightly better than an average forecast of HK$3.6 billion, according to Thomson Reuters Eikon data.
Macau, a former Portuguese colony located an hour away from Hong Kong by ferry, has seen gambling revenues soar despite slowing growth in China, with revenues growing 20 percent in July.
SJM, the sole player in Macau for 40 years before the entry of operators such as Las Vegas Sands Corp (LVS.N) and Wynn Resorts Ltd (WYNN.O) in 2001, has managed to retain about a quarter of Macau's gambling market share from holding a third two years ago.
Valued at $14 billion, SJM has been facing intense competition from rivals like Sands and Galaxy Entertainment Group Ltd (0027.HK), which have opened new resorts on Macau's Las Vegas-style Cotai strip, drawing gamblers away from the peninsula where SJM dominates.
SJM does not have a presence on Cotai, home to Sands' Venetian resort, Melco Crown Entertainment Ltd's 6883.HK strobe-lit City of Dreams and Galaxy's gold-turreted edifice, but was given initial approval for a new resort in May. The property is unlikely to open before 2015 with 700 gaming tables and 2000 hotel rooms.
The company's Grand Lisboa flagship on Macau's peninsula is the main driver of earnings with SJM also gaining revenue from its satellite casinos which are owned by third parties. SJM has 20 of Macau's 35 casinos, according to the Gaming and Inspection Board's data.
The consensus remains bullish on SJM as the operator has one of the strongest balance sheets out of the six listed casino operators with net cash of HK$23.5 billion at the end of last year and a committed dividend payout. Sixteen analysts have a "buy" or "very strong buy" rating, while seven have a "hold". There is only one "sell" rating.
Shares in SJM were unchanged on Wednesday due to a typhoon that closed Hong Kong financial markets. They are due to resume trade on Thursday.
(Reporting by Twinnie Siu; Writing by Farah Master; Editing by Matt Driskill)