SJM Holdings is the Macau gaming operator most exposed to Sands China’s more aggressive player reinvestment program, brokerage CLSA said in a research note published on Thursday.
Analyst Jeffrey Kiang said SJM’s gross gaming revenue market share slipped to 9.6 percent in the first quarter of 2026, slightly below CLSA’s forecast of 9.8 percent, and pointed to continued pressure on the operator’s top line.
SJM also recorded an 8 percent year-on-year decline in gaming revenue during the May Golden Week, which the brokerage attributed to the discontinuation of satellite casinos, even though the total number of gaming tables remained unchanged.
CLSA said player reinvestment costs appeared to be rising structurally, even as SJM maintained a disciplined approach to operating expenses. ‘Commissions and incentives’ as a percentage of gross gaming revenue jumped to 12.6 percent in the first quarter of 2026, up from 8 percent in the same period a year earlier and 9.3 percent in the fourth quarter of 2025.
SJM’s first-quarter adjusted EBITDA fell 4 percent year-on-year to HK$917 million ($117.1 million), 1 percent above consensus but 2 percent below CLSA’s forecast. The adjusted EBITDA margin reached 15.5 percent, the highest level since the first quarter of 2017, following the full closure of satellite casinos. The company posted an attributable loss of HK$62 million ($7.9 million) in the quarter, compared with a profit of HK$31 million a year earlier. The interest coverage ratio stood at roughly two times as of the first quarter of 2026.
Despite the cost discipline, CLSA flagged that profit headwinds remain. SJM has guided for capital expenditure of HK$2 billion ($255.4 million) in 2026 and HK$1 billion ($127.7 million) in 2027, including HK$1 billion earmarked for the conversion of its Hengqin project into a hotel. The aggregate capex of HK$3 billion ($383.1 million) over the two-year period is above CLSA’s forecast.
The company expects its net debt to EBITDA ratio to fall below seven times by the end of 2027, while CLSA forecasts a ratio of 6.1 times. The brokerage warned that elevated capex could pose downside risk to projected dividends in 2027.
