Analysts at JP Morgan raise concerns about SJM Holdings’ liquidity
According to analysts, SJM Holdings has only about six months of liquidity runway.
Macau.- SJM Holdings Ltd is facing a serious financial crisis, according to the latest report from JP Morgan Securities. Analysts DS Kim, Amanda Cheng and Livy Lyu suggest the casino operator has only six months of liquidity.
Their report states that SJM Holdings’ loan refinancing has stalled due to government delays, which will likely require the company to seek external funding, either through debt or capital. JP Morgan analysts also warned that SJM Holdings’ Grand Lisboa Palace casino resort could take a long time “to ramp up and achieve a critical mass of patrons for breakeven.”
Analysts added that SJM Holdings’ operating expense was “likely to rise from the second half of 2022 amid the likely closure of some satellite casinos” as they believe SJM Holdings will have to bring its gaming staff onto its own payroll. “This would shorten its liquidity runway even further, they analysts noted.
There are currently 18 satellite casinos in Macau operating under licences attached to one of the six casino concessionaires but run by third parties in individually owned premises. Some 14 are operating under the licence of SJM Holdings Ltd, and the other four are tied to Galaxy Entertainment Group (GEG) and Melco Resorts and Entertainment Ltd.
A few weeks ago, Emperor Entertainment Hotel Limited reported that its casino at the Grand Emperor Hotel will cease operations due to the termination of its service contract with SJM, which expires on June 26. However, Macau’s Labour Affairs Bureau has stressed that SJM has a duty to protect the rights of laid-off workers following the closure of the casino.
SJM Holdings reported a full-year loss of HKD4.14bn (US$530.3m) for 2021.
SJM chairman confident about next concession period in Macau
Daisy Ho Chiu Fung, chairman of SJM Holdings, has voiced confidence in the company securing a new concession in Macau’s upcoming retender.
Delivering SJM’s annual report, Fung said: “As of this date, the final terms and conditions of the next concessions have not entirely been determined, but we know that there will be up to six, ten-year concessions, accompanied by important regulatory changes and certain changes in the structure of the concessionaire and its assets.”
She added: “Since the draft revised gaming law was presented by the Macau government in September, we have been preparing for the tender process and confidently looking forward to our continued… presence in Macau.”
