UBS: Gives SJM Holdings (00880) a "sell" rating with a target price of 2.8 Hong Kong dollars.

UBS released a research report stating that SJM Holdings (00880) announced it will spend 1.75 billion Hong Kong dollars to acquire the Grand Lisboa Hotel, including 1.75 billion Hong Kong dollars for the acquisition of shares and about 17.5 billion Hong Kong dollars to repay debts on behalf of the seller, Leong On Kei. UBS gave a "sell" rating to SJM Holdings with a target price of 2.8 Hong Kong dollars, and believes that this acquisition will be beneficial for SJM Holdings. UBS believes that this acquisition will allow SJM Holdings to continue operating its casino business at the Grand Lisboa Hotel and plans to increase the number of gaming tables to around 90. With the closure of its other satellite casinos by the end of 2025, it is expected that this move will further boost the mid-market gaming revenue of the Grand Lisboa from its level of 1.4 billion Hong Kong dollars in 2024. The report mentioned that the acquisition will be financed through unused credit facilities of SJM Holdings, with the leverage impact mainly offset by additional EBITDA brought about by the growth in market share of the Grand Lisboa and the better utilization of assets by SJM Holdings in the peninsula.