Fitch upgrades outlook for SJM Holdings

Lea Hogg January 5, 2024

SiGMA news

Fitch upgrades outlook for SJM Holdings

In a recent evaluation, Fitch Ratings has made a significant adjustment to the outlook for SJM Holdings Limited (SJM), a prominent stakeholder in Macao’s gaming sector.

The Long-Term Foreign-Currency Issuer Default Rating (IDR) has transitioned from a Negative to a Stable outlook, signaling a noteworthy recalibration of the company’s standing.

Macao’s economic resurgence

Fitch’s meticulous examination places SJM within the broader context of Macao’s economic resurgence, particularly in the tourism and gaming sectors.

Despite the challenges posed by significant debt from the Grand Lisboa Palace (GLP) expansion and the financial ramifications of the pandemic, Fitch underscores SJM’s historical financial prudence and adaptability.

The analysis emphasizes the strategic financial manoeuvres SJM has historically employed to navigate economic uncertainties.

SJM’s Fiscal Strategy

Delving further into SJM’s operational landscape, Fitch scrutinizes the progress of the Grand Lisboa Palace (GLP) expansion. Despite a slower-than-expected growth rate, the report acknowledges SJM’s deliberate approach in enhancing market share through connectivity improvements and diversification initiatives.

Fitch provides insights into SJM’s future financial trajectory, outlining projections for EBITDA and free cash flow, thereby offering a nuanced understanding of the company’s commitment to deleveraging.

Comprehensive Risk Assessment and Liquidity Overview for SJM Holdings

Fitch conducts a thorough risk assessment, outlining the key determinants that could influence SJM’s credit rating positively or negatively. The report offers a comprehensive breakdown of the assumptions underpinning the rating case, encompassing GLP’s revenue projections and adjusted property EBITDA for both self-promoted and satellite casinos. Additionally, Fitch sheds light on liquidity considerations, emphasizing SJM’s robust financial position and positive free cash flow projections in 2024.

In the intricate dynamics of the gaming industry sector, Fitch Ratings’ comprehensive analysis serves as a strategic compass for stakeholders, offering detailed insights into SJM Holdings’ current financial position, future trajectory, and adaptability in an ever-evolving industry.

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