SJM Holdings Earnings: Nice Turnaround at Group Level EBITDA, but GLP Ramp-up Still Needs Patience

SJM Holdings returned to positive adjusted EBITDA for the first time since the start of 2022. We’re also encouraged by management’s comment that the company’s month-to-date performance has been decent, with mass gaming volume reaching 110% of 2019 levels, or 95% on a comparable basis (excluding Grand Lisboa Palace). We think these positive data points are broadly in line with its Macao peers, confirming a solid recovery in Macao gaming demand. However, the ramp-up of new property, GLP, is still lagging, having gained less than 1% market share in the quarter with an adjusted EBITDA loss of HKD 230 million. We think a continued ramp-up of both gaming and nongaming facilities, coinciding with improving tourism traffic to Macao, will accelerate sales growth at GLP quarter over quarter, and lead to a turnaround in adjusted EBITDA in the second half. We maintain our fair value estimate of HKD 5.60 per share, after a minor tweak of our forecast.