[ET Net News Agency, 6 May 2020] Citi Research cut its target price for SJM Holdings
(00880) to HK$9.1 from HK$9.7 and maintained its "buy" rating.
The research house cited management on the earnings call reiterating that Grand Lisboa
Palace (GLP) remains on track to open by end-2020 (subject to government approval).
HK$33bn has been spent as of end-1Q 2020 and CAPEX budget remains at HK$39bn. Management
plans to transfer 1,000 employees from its existing casinos to GLP. SJM had a solid start
during the relatively normal month of January when it generated HK$279m of EBITDA.
However, the operator subsequently incurred EBITDA losses of HK$285m and HK$194m in
February and March, respectively. The service agreement with Casino Eastern was terminated
in March and a small provision arose during 1Q.
Reflecting the 1Q results and the latest operating trends, Citi cut its FY2020-22
earnings forecasts by HK$382m/HK$206m/HK$217m respectively. (KL)