SJM Holdings is facing what analysts describe as a ‘perfect storm’ of operational pressures, as satellite casino closures, rising costs, and declining market share weighed on its latest performance, according to a research note by CLSA analyst Jeffrey Kiang.
In the investment memo, Kiang noted that SJM’s fourth-quarter 2025 adjusted EBITDA fell 32 percent year-on-year to HK$671 million ($86 million), coming in below both CLSA’s forecast and market consensus. The weaker result was attributed to a combination of factors, including the closure of satellite casinos, higher reinvestment in players, costs linked to the acquisition of the L’Arc property, and one-off expenses related to Macau’s hosting of the 15th National Games.
CLSA noted that spending tied to preparations for the National Games totaled about HK$40 million ($5.1 million) in the quarter, adding to operating costs during the period.
The brokerage said satellite casino closures during the second half of 2025 were a major factor behind a decline in SJM’s revenue market share. CLSA estimates the operator’s share fell by about 3.1 percentage points year-on-year to around 10.5 percent in the fourth quarter as some players shifted to competing properties.
Profitability also deteriorated; SJM reported a loss attributable to shareholders of HK$256 million ($32.8 million) for the fourth quarter, reversing profits recorded in the previous quarter and the same period a year earlier. The EBITDA margin contracted by about 3 percentage points year-on-year to 10.3 percent.
The company also did not declare a final dividend, due to continued high leverage following its acquisition of the L’Arc Hotel property in late 2025. CLSA indicated that reducing debt will likely remain a priority, meaning dividend payments may not resume soon.
Kiang added that SJM faces stronger structural headwinds than some rivals amid increasingly aggressive spending by competitors, such as Sands China, to attract overlapping customer segments.
Despite the near-term challenges, CLSA maintained an ‘Outperform’ rating on SJM, noting the stock is trading at a discount to the sector on valuation metrics and that the recent pressures could create an easier base for improvement ahead.
