Despite concerns of China’s macroeconomic outlook, CBRE Research has expressed optimism about the prospects for Macau’s gaming market and SJM Holdings in particular.
After hosting SJM’s Chief Financial Officer Christopher Ip Shih Ming in London for a non-deal roadshow last week, CBRE highlighted three key takeaways from their discussions with investors.
The brokerage noted that investors were primarily worried about the regulatory environment and China’s influence on Macau but cited China’s continued expansion of the Individual Visit Scheme, which allows more mainland Chinese to travel to Macau and Hong Kong, as evidence of Beijing’s commitment to supporting the gaming hub’s development.
At the same time, while their economic outlook on China remains cautious, CBRE said Macau’s gross gaming revenue recovery through May indicates less correlation to the broader Chinese economy.
‘Although we wouldn’t suggest Macau is immune to slowing economic growth in China, it has proven more resilient. We see two driving forces here. The first is pent-up leisure demand in China after a three-year lockdown. We saw similar trends in other markets upon reopening with demand for experiential travel outweighing demand for consumer goods’, the brokerage added.
According to SJM’s 1Q24 financial results, the company recorded a 74.5 percent year-on-year increase in net gaming revenue in the quarter, reaching HK$6.46 billion ($827 million).
During the same period, the group’s adjusted EBITDA increased from HK$31 million ($4 million) in 1Q23 to HK$864 million ($110.5 million) in 1Q24.
CBRE analysts John DeCree and Max Marsh added that under new leadership from Managing Director Daisy Ho and a ‘more proactive CFO’ (Ip Shih Ming), the longest-running Macau concessionaire is working to reposition its Grand Lisboa Palace resort and identify operational efficiencies, with ‘early signs of progress’.
At the end of 2023, SJM Holdings appointed Ip Shih Ming as its new Chief Financial Officer (CFO), hailing its experience in ‘investments, real estate transactions and corporate finance’.Â
Overall, the CBRE team said they were “encouraged by the level of investor interest” in both Macau and SJM, despite prevailing macroeconomic concerns.
