Grand Lisboa Palace to deliver US$438m in EBITDA in 2024, analysts say

UBS Securities highlighted Grand Lisboa Palace’s growth prospects.

Macau.- Analysts at UBS Securities Asia have expressed optimism about the earnings potential of Macau’s Grand Lisboa Palace (GLP). The banking institution stated the market has undervalued the project and anticipated that SJM Holdings would unlock significant value through GLP’s ramp-up, strategic balance sheet deleveraging and a shift towards Cotai in the next six to 18 months.

UBS said SJM Holdings has been among the most leveraged operators in Macau, largely due to its HK$39.0bn (US$5bn) capital investment in Grand Lisboa Palace and the financial impacts of the Covid-19 pandemic. However, it suggested that net debt will decrease from the current US$3.bn to US$2.1bn by the end of 2024, with the resort generating EBITDA and cash flow, leading to a reduced net-debt-to-EBITDA ratio.

This transformation could see the net-debt-to-EBITDA ratio improve from an estimated 9.1 times at the end of the present year and 2.6 times by the close of 2024. Analysts projected that GLP could achieve EBITDA of US$438m by 2024.

See also: SJM Holdings to run Grand Lisboa Palace at full capacity by year-end

UBS’s analysis was based on a “peer property productivity analysis” and assumed Macau’s market-wide mass gross gaming revenue to reach 105 per cent of the 2019 levels by 2024. According to the institution, this positive trajectory would position Grand Lisboa Palace favourably with an estimated daily revenue of US$630 per room, in line with properties of a similar scale and below the Cotai average of US$900 in 2019.

The Grand Lisboa Palace has already opened two of its hotels. SJM Holdings posted a loss of HK$869m (US$110.9m) for the first quarter of the year while gross gambling revenue grew 53 per cent year-on-year to HK$3.89bn (US$496m). 

Grand Lisboa Palace generated gross revenue of HK$474m, with gross gaming revenue of HK$310m and non-gaming revenue of HK$164m, compared with HK$156m and HK$115m in 2022. Adjusted property EBITDA was negative HK$230m.