CBRE: SJM cuts staff by 10% as satellite casino closures tighten margins

[Photo:Nadia Shaw]

SJM Holdings has cut its workforce by 10% over seven months and is pursuing further cost reductions as the closure of its satellite casinos continues to pressure margins and complicate the Macau operator’s efforts to reduce debt, according to CBRE Equity Research.

SJM, which operated nine of Macau’s 11 satellite casinos before their closure in 2025, is widely recognized as the concessionaire most exposed to the end of the satellite-casino model.

For the six months ended June 30, SJM reported a net loss of HKD295 million (USD37.6 million) in the first half of 2026, while group-wide gross gaming revenue fell 18.5% year over year to HKD12.1 billion ($1.54 billion).

In an accompanying statement on SJM Holdings’ 2026 interim results, Daisy Ho, SJM Holdings chairwoman and managing director of SJM Resorts, said the first half of the year marked the completion of a major structural transition for the group as it assumed direct management of its entire portfolio.

“This has strengthened our control over customer experience, cost structure and earnings quality across our properties, with the benefits already reflected in our operating performance and margin expansion,” Ho said.

“For the remainder of the year, we remain focused on enhancing the distinct positioning of our properties, further elevating our offerings, and strengthening our appeal across targeted market segments,” she added. “Through disciplined execution of these initiatives, we aim to deepen customer loyalty, improve portfolio performance, and support sustainable long-term growth.”

CBRE analysts John DeCree and Max Marsh said in their recent note that SJM management had introduced “several other initiatives” aimed at improving operating margins by the end of the year.

Market share improves

SJM’s second-quarter EBITDA rose 13.9% year over year to HKD783 million. However, CBRE cautioned that the increase reflected an easier comparison in casino hold rates rather than stronger underlying performance. “Growth was due entirely to an easy hold comparison versus the prior year,” DeCree and Marsh wrote.

SJM’s properties captured 10% of Macau’s gross gaming revenue market in the second quarter, up 2.5 percentage points from a year earlier. CBRE attributed part of that gain to a favorable swing in VIP hold rates.

The operator also gained 0.4 percentage points of market share sequentially. Management attributed the improvement to targeted customer-experience initiatives and product enhancements. SJM’s share increased in each month of the quarter, reaching 10.8% in June – its highest monthly level since the company completed the closure of its satellite casino operations in October 2025.

The improvement offers some evidence that SJM’s efforts to rebuild its customer base are beginning to produce results. CBRE nevertheless said the company remained on an “arduous path to deleveraging” as it works to offset lost revenue and higher costs inherited from the satellite business.

“As the company’s OPEX efficiencies and controlled reinvestment strategy begin to drive cash flow generation, management plans to direct its proceeds to reducing leverage,” the analysts wrote.

At the company’s flagship Grand Lisboa property on the Macau peninsula, adjusted EBITDA rose 2.9% year over year to HKD434 million on a 7.5% increase in gross gaming revenue.

CBRE described the property as SJM’s “reliable cash flow generator,” contrasting it with Grand Lisboa Palace, which the brokerage said was “still finding its footing.”

Grand Lisboa Palace

Grand Lisboa Palace, SJM’s Cotai resort, has yet to establish a strong position in the mass market. Revenue at the property increased 14.4% year over year in the second quarter, driven entirely by VIP gaming. Rolling-chip volume rose 9.2%, while the VIP hold rate improved by 1.3 percentage points.

CBRE said that “while progress in VIP is encouraging, this business is inherently volatile and highly competitive.” Grand Lisboa Palace still needs to find a greater share of the mass market segment to drive higher margins and cash flow,” the analysts wrote.

SJM is undertaking a substantial renovation of the resort’s mass gaming floor. The work is being completed in stages to limit disruption, but CBRE expects the project to affect operations until its anticipated completion in the first half of 2027.

CBRE maintained a “hold” rating on SJM shares but lowered its price target from HK$2.50 to HK$1.50. The brokerage said Macau remained highly competitive and that the loss of revenue from SJM’s former satellite-casino operations had been difficult to overcome.