Home NewsCasino Fitch upgrades SJM Holdings’ outlook to “stable”, amid Macau success

Fitch upgrades SJM Holdings’ outlook to “stable”, amid Macau success

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Fitch Ratings changed its outlook for SJM Holdings, from “negative” into “stable”, anticipating that the company will turn positive free cash flow in 2024.

SJM should be able to grow due to the positive FCF, and also reduce its debt. Fitch is projecting SJM to reach HK$6.6bn (PS664.5m/EUR770.9m/US$845.3m) in EBITDA by 2026. SJM’s EBITDA is expected to reach HK$6.6bn (PS664.5m/EUR770.9m/US$845.3m) by 2026, according to Fitch.

Fitch said that SJM’s rating was limited due to the “high leverage” caused by debts accumulated as a result of the Covid-19 Pandemic and the large investment in the Grand Lisboa Palace integrated resort, both located in Macau.

SJM was also restricted in its ratings due to possible regulatory issues both within Macau and outside. The rating was also restricted due to potential regulatory issues in Macau and beyond.


A much needed positive year for SJM

SJM has bounced back from a disappointing 2022, in which seven casinos were closed in December by the operator. The 2023 year is a big one for SJM as Covid-19 regulations are finally relaxed in Macau.

SJM posted its first positive EBITDA for six months since 2019. The total revenue in the first half of 2023 soared 126.7%, to HK$9.36bn compared with H1 2022.

SJM reported a 492,9% rise in its net gaming revenues in the third quarter, totaling HK$5.41bn. The gross gaming revenue increased by 502%, to HK$5.73bn.

SJM wasn’t the only operator who benefited from the relaxation of pandemic regulations. Melco Resorts & Entertainment posted a jump in revenue of 320.6%, to $1.02bn. The casino revenue increased by 346.2%, to $812.1m.


Macau prospering despite China’s struggles

Macau’s gambling sector experienced another excellent month in December, reaching a monthly gross income of MOP18.6bn (PS1.8bn/EUR2.1bn/$2.3bn). This is an increase of 433% on a year-on-year basis.

This was despite China’s continued underperformance. Lottery sales in China decreased by 2.5% from November last year, and sports lotteries were down also 13.3%.

The gross gaming income recorded by Macau for December is 15.7% more than that of November, when MOP16bn was reported.

Macau’s total gross revenue for 2023 is now MOP183.1bn. This figure represents a 333.8% increase over the MOP42.2bn earned in 2022.

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