SJM suffering cash bleed, reports Q1 losses of HKD1.3b

SJM is suffering a continual cash bleed with brokerage firm Sanford C. Bernstein warning that the gaming operator is in “critical” need of boosting its financial liquidity, in view of the losses the company is suffering.

In a note, the consultancy warned that continued delays in the refinancing of SJM’s bank debts are raising concerns, recalling that the management has indicated a standby loan facility of up to HKD5 billion from STDM. No further details on the refinancing were given.

In an earnings report, SJM Resorts recorded losses of HKD1.3 billion in the first quarter, significantly down from the HKD 647 million losses recorded during the same period in 2021. 

The adjusted EBITDA of the group in the first quarter was negative HKD474 million, as compared with negative HKD319 million in the first quarter last year.

Also, SJM Resorts reported gaming revenue at HKD2.3 billion, as compared with HKD2.4 billion in the first three months of last year.

Bernstein has noted that the opening of the Grand Lisboa Palace last year has led to a “continued cash bleed that will not let up in the near term.”

Gross revenue of the group’s first Cotai property in the first three months of this year was HKD271 million, including gross gaming revenue of HKD156 million and non-gaming revenue of HKD115 million. After adjusting for pre-opening expenses totaling HKD132 million, its Adjusted Property EBITDA was negative HKD216 million.

Meanwhile, analysts at Bernstein have noted that SJM’s management “faces some liquidity risk if the business environment does not improve materially in the near term.”

In a note, analysts Vitaly Umansky and Louis Li have warned that the company currently has liquidity on hand that could last for three to four months.