SJM Holdings’ deleveraging slower than competitors: Lucror Analytics
Analysts pointed out the casino operator’s excess staff costs and Grand Lisboa Palace’s slow ramp-up contribute to financial pressures.
Macau.- SJM Holdings is encountering hurdles in its deleveraging efforts, displaying a pace slower than its industry counterparts, as reported by Singapore-based Lucror Analytics.
The company’s financial strain is attributed to elevated staff costs following the closure of five satellite casinos in December 2022 and a gradual operational ramp-up at the Grand Lisboa Palace.
Lucror Analytics also expressed a negative credit bias towards SJM, highlighting the company’s unique challenges in contrast to its peers.
Lucror’s credit analyst, Leonard Law, pointed out that, unlike its competitors, SJM Holdings has not yet initiated net debt reduction. Free cash flow generation in the third quarter and the initial nine months of 2023 remained neutral after accounting for interest payments and capital expenditures.
Law emphasized SJM’s weaker liquidity compared to peers, despite major debt maturities not arising until the financial year 2026.
Last week, Fitch Ratings adjusted SJM Holdings’ long-term foreign-currency issuer default rating outlook from “negative” to “stable”, affirming the rating at ‘BB-.’
Fitch attributed the stable outlook to Macau’s robust visitor arrivals and gaming revenue recovery. The agency projected SJM Holdings’ EBITDA to reach HK$3.6bn (US$461.1m) in 2024, a significant increase from the estimated HK$1.7 billion in 2023.
