Casino operator SJM Holdings Ltd. (0880.HK) said Monday the Macau government's new policy to cap gambling tables won't affect the company because it has no short-term expansion plans.
SJM Chief Executive Ambrose So told Dow Jones Newswires in an interview the company will hold back its plans to expand in Macau's Cotai area for now because "we think that the critical mass hasn't grown to such an extent that would warrant our investment there."
He said SJM, Macau's biggest casino operator by revenue, operates 1,700 gambling tables.
"We can always reshuffle our tables to boost efficiency," said So.
Last week, Macau's top gambling official Francis Tam told legislators that the total number of gambling tables in the city will be capped at 5,500 from the current 5,000 and the government won't approve new casino projects until 2013. The cap comes amid concerns that Macau's gaming market is expanding at an unsustainable pace.
In the first comments by a casino operator directed at the cap, So said he believes the policy is aimed at future expansion projects, adding that he doesn't think the government would ask any of the six casino operators to cut back on current tables.
Among the operators, Las Vegas Sands Corp.'s (LVS) Macau unit has the biggest expansion project in Cotai under development, with plans to add around 700 new tables, according to analyst estimates, which would on its own push the number of tables over the cap.
For SJM, the poor health of its 88-year-old chairman, casino mogul Stanley Ho, has been an overhang on its stock in recent months, leading to lower trading valuations compared with its peers, analysts say. Ho left the hospital earlier this month after a seven-month stay.
But So said he doesn't believe Ho's health will affect the management of the company.
"One thing we have to separate is ownership and management. Ownership is within his family. Management... we have independent directors and we have professionals running the casino operation," said So.
"There is enough for us to do in the next 10 years," he said.
So said he expects Macau's casino gambling revenue to rise 13% to 15% this year, up from a 9.7% rise in 2009.
SJM reported Monday a 14% rise in 2009 net profit to 906.7 million Hong Kong dollars ($116.8 million) on stronger gambling revenue in the second half.
Source: Dow Jones Newswires, Kate O'Keeffe