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January 11, 2024 | 3:30 PM
SJM Holdings to achieve positive free cash flow in 2024, says Fitch
Fitch Ratings expects SJM Holdings Limited to have positive free cash flow (FCF) in 2024 with further growth in 2025-2026. This positive trend is expected to lead to a reduction in the debt balance from HK$29 billion (US$2.7 billion) at the end of September 2023 to HK$26 billion (US$3.3 billion) by the end of 2025 and to HK$23 billion (US$3 billion) by the end of 2026.
In a recent investment memorandum, the rating agency raised the outlook for the long-term issuer default rating (IDR) of SJM Holdings Limited, a Hong Kong-registered company, in foreign currency from "Negative" to "Stable". The increase reflects a steady recovery in revenue from visits and gambling in Macau, despite the economic downturn in China.
Fitch also notes that in the foreseeable future, SJM Holdings "will focus on deleveraging, as it adheres to a conservative financial policy."
Fitch highlighted some key rating factors, including the rapid recovery in Macau attendance and gaming performance. "Total gross gaming revenue (GGR) reached 75 percent of 2019 levels in Q4 2023, as GGR for the mass market is likely to improve to over 100 percent of 2019 levels. Macau's attendance also continues to improve, with total visits reaching 89 percent of 2019 levels in November 2023, or 70 percent in 11 months of 2023. We expect moderate consistent improvement in 2024 as air traffic capacity in Hong Kong and Macau continues to normalize."
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