[ET Net News Agency, 23 July 2020] J.P. Morgan lifted its target price for SJM Holdings
(00880) to HK$11 from HK$10 and maintained its "overweight" rating.
With the Guangdong-Macau travel bubble in place, the research house now modeled industry
GGR (gross gaming revenue) to return to normal levels by 3Q of 2021 on its assumption that
major travel curbs would be gradually eased by end of 2020.
While the stock has already outperformed peers significantly (0%, versus peers' 21%
decline year-to-date), JPM thinks the remaining window of opportunity is reasonably
attractive.
First, it's all about the US$5bn Grand Lisboa Palace, which JPM thinks will finally open
by 2Q 2021. The property can comfortably lift the group's EBITDA by 70% from 2019 levels
in the next couple of years. Second, despite concerns on its execution, SJM's profit
growth had been surprisingly strong and resilient in the past year. With a new COO and
potential further revamp of management, its execution may surprise.
It added that the stock looks comfortable at 11-12x 2019 EBITDA, leaving room for a
pre-opening rally. (KL)