Fitch improves SJM Holdings outlook to “stable” amid Macau success
Fitch Ratings has altered its outlook on SJM Holdings from “negative” to “stable”, expecting the company to turn free cash flow (FCF) positive in 2024.
The positive FCF should help SJM to expand, while also “driving a reduction in debt balance”. Fitch is projecting SJM to reach HK$6.6bn (£664.5m/€770.9m/US$845.3m) in EBITDA by 2026. The agency points to the continued growth of Macau in terms of visitation and gaming revenue – both of which are reasons to be positive for SJM.
Fitch warned SJM’s ratings were limited by the “high leverage” caused by the debt accumulated from the impacts of the Covid-19 pandemic, as well as the heavy investment into the integrated Grand Lisboa Palace resort in Macau.
SJM’s ratings were also restricted due to potential regulatory issues in Macau and beyond. It also cited further struggles in the Chinese economy and the risk caused by the extended expansion of the Grand Lisboa Palace in a competitive Macau market.
Fitch Ratings has altered its outlook on SJM Holdings from “negative” to “stable”, expecting the company to turn free cash flow (FCF) positive in 2024.
The positive FCF should help SJM to expand, while also “driving a reduction in debt balance”. Fitch is projecting SJM to reach HK$6.6bn (£664.5m/€770.9m/US$845.3m) in EBITDA by 2026. The agency points to the continued growth of Macau in terms of visitation and gaming revenue – both of which are reasons to be positive for SJM.
Fitch warned SJM’s ratings were limited by the “high leverage” caused by the debt accumulated from the impacts of the Covid-19 pandemic, as well as the heavy investment into the integrated Grand Lisboa Palace resort in Macau.
SJM’s ratings were also restricted due to potential regulatory issues in Macau and beyond. It also cited further struggles in the Chinese economy and the risk caused by the extended expansion of the Grand Lisboa Palace in a competitive Macau market.
That pandemic recovery continued in Q3, with SJM reporting a 492.9% increase in net gaming revenue, accumulating HK$5.41bn. Gross gaming revenue also hiked 502% to HK$5.73bn.
SJM was not the only operator to feel the benefit of pandemic restrictions relaxing. Melco Resorts & Entertainment reported a revenue jump of 320.6% to $1.02bn in Q3. Casino revenue, meanwhile, increased 346.2% to $812.1m.
This strong showing was in spite of China, which holds sovereignty over Macau, continuing to underperform. Lottery ticket sales in China for November decreased 2.5% year-on-year, while sports lottery sales were also down 13.3% from the same month last year.
Meanwhile, gross gambling income in Macau in December was 15.7% higher than the MOP16bn recorded in the region in November.
Macau’s cumulative gross income for 2023 now stands at MOP183.1bn, 333.8% higher than the MOP42.2bn accumulated in the entirety of 2022.
