Moody’s downgrades SJM, sees modest earnings growth

Moody’s Ratings has downgraded SJM Holdings Ltd.’s corporate family rating to B1 from Ba3, citing expectations of only gradual earnings growth over the next 12 to 18 months, while revising the outlook to stable from negative.

The rating agency said it expects the Macau-based casino operator’s adjusted EBITDA to rise to HKD 4.1 billion in 2026 and HKD 4.5 billion in 2027, up from HKD 3.4 billion in 2025.

Growth is expected to be driven mainly by contributions from Casino L’Arc, acquired in December 2025, and incremental gains from gaming tables reallocated from former satellite casinos.

Despite this projected improvement, Moody’s said SJM’s financial leverage will remain elevated. “The downgrade reflects our anticipation that SJM’s earnings growth will only be gradual over the next 12 to 18 months,” Moody’s vice president and senior credit officer Stephanie Lau said.

The agency said performance at SJM’s flagship properties, Grand Lisboa and Grand Lisboa Palace, is expected to remain subdued, in line with first-quarter trends.

Liquidity is assessed as good, with HKD 2.0 billion in cash and sufficient revolving credit facilities to cover capital spending and debt maturities over the next 12 to 18 months. SJM’s issuance of $540 million in senior unsecured notes due 2031 has extended its debt maturity profile and improved financial flexibility.

Looking ahead, Moody’s forecasts SJM’s adjusted debt-to-EBITDA ratio will improve to about 7.3 times in 2026 from 9.0 times in 2025, and further to about 6.3 times in 2027, supported by earnings growth and moderate debt reduction. Adjusted debt is expected to remain largely stable in 2026 before declining in 2027.

In the first quarter, SJM reported a net loss of about HKD 62 million compared with a profit of HKD 31 million seen in first-quarter 2025 (1Q25). Adjusted EBITDA declined 4.3% to HKD 917 million. Notably, 1Q26 marked the company’s first full quarter operating without satellite casinos.

SJM Resorts ended all satellite casino operations on Dec. 30, 2025, with the closure of Casino Landmark.

The company had explored acquiring properties – Casino L’Arc Macau and Casino Ponte 16 – to convert them into directly managed operations under the revised gaming laws. However, SJM ultimately acquired only Casino L’Arc and allowed other agreements to expire.

Moody’s said the B1 rating reflects SJM’s established position in Macau, as well as high leverage, geographic concentration and competitive pressures.