Fitch forecasts SJM’s EBITDA to double, reach $461.1 million in 2024

Earnings before interest, taxes, depreciation, and amortization (EBITDA) for SJM Holdings Ltd. is expected to rise from an anticipated HKD1.7 billion in 2023 to HKD3.6 billion (US$461.1 million) in 2024, according to a projection by Fitch Ratings Inc.

The ratings agency projects that the Macau casino operator’s EBITDA will rise to HKD5.2 billion in 2025 and HKD6.6 billion in 2026. It is anticipated that EBITDA leverage would decrease to 3.7 times in 2026 and 5.3 times in 2025.

Fitch updated the outlook for SJM Holdings’ long-term foreign-currency issuer default rating from “negative” to “stable” and confirmed the rating at ‘BB-‘ in a recent review. Despite China’s economic difficulties, Macau has seen a solid comeback in tourist numbers and casino income, which accounts for the stable prognosis.

SJM Holdings, a firm registered on the Hong Kong Stock Exchange, is the parent company of SJM Resorts Ltd., one of the six casino concessionaires in Macau. The company has four independently branded casinos in Macau in addition to nine satellite sites, the most recent of which is the Grand Lisboa Palace in Cotai.

Because SJM Holdings’ free cash flow became positive in 2025 and 2026, Fitch predicts that the company would cut debt in 2024. According to the article, SJM Holdings would adhere to a reasonable financial strategy and emphasize deleveraging.

Although the Grand Lisboa Palace’s expansion has not gone as planned, Fitch points out that the other self-promoted casinos in the group have rebounded well. According to the group, Grand Lisboa and other self-promoted casinos’ adjusted property EBITDA will reach 95% of 2019 levels by 2024.

The company’s operations are impacted by additional costs associated with SJM Holdings’ satellite casinos, although Fitch recognizes the company’s efforts to cut personnel and predicts complete absorption of excess costs by 2025. As of September 30, 2023, SJM Holdings has enough of cash and a reasonable investment pipeline. It has HKD 5.0 billion in cash and deposits and HKD 3.3 billion in undrawn revolver facilities. This sum of money is expected to pay off HKD 1.0 billion in bank debt that is coming due in less than a year.

Original story by: GGRAsia