Furui: Rating of "Hold" for SJM Holdings (00880) with a target price of 2.5 Hong Kong dollars.

Furui released a research report stating that SJM HOLDINGS (00880) announced the closure of satellite casinos yesterday. They believe that this may not have a significant impact on its EBITDA, but it could affect its market share as these satellite casinos account for nearly 40% of Sands Chinas revenue. However, the bank believes that relocating gambling tables to its own casinos (including the Grand Lisboa) could help Sands China improve its profit margin. The bank's target price for Sands China is 2.5 Hong Kong dollars, with an investment rating of "hold". Furui stated that satellite casinos contributed 38% of Sands China's revenue in the first quarter of 2024 and 2025. The contribution to Sands China's EBITDA in the first quarter of 2024 and 2025 from satellite casinos was 1.1% and 8.2% respectively. In 2024, the EBITDA profit margin of satellite casinos was 0.4%, while the overall EBITDA profit margin of Sands China was 13%, and Grand Lisboa was 9%. The bank believes that relocating gambling tables to Grand Lisboa could help Sands China improve its profit margin. However, this could have a negative impact on the overall situation in Macau, as the lack of casinos may reduce foot traffic around these areas, potentially affecting commercial activities and employment in these areas.