The high-end competition in the Macau gaming market is entering a real-money war of attrition, and SJM Holdings has been named by brokers as the most vulnerable in this melee. In a research report released on Thursday, CLSA pointed out that with Sands China adopting a more aggressive strategy in reinvesting in players, SJM is currently the most sensitive peer among all Macau gaming operators in terms of investment intensity. Analyst Jiang Wensen provided convincing data: SJM's gross gaming revenue market share has slightly declined to 9.6% in the first quarter of 2026, slightly below CLSA's previous forecast of 9.8%, and its gaming revenue during the May Golden Week fell by 8% year-on-year, although the total number of gaming tables did not decrease, the complete withdrawal of satellite casinos directly weakened SJM's revenue capacity during key holidays.
The proportion of commissions jumped from 8% to 12.6%, a paradox of profit statements under cost self-discipline
The core pressure currently borne by SJM comes from a structural transformation that the entire Macau gaming industry is experiencing—comprehensive escalation in the cost of reinvesting in players. The proportion of SJM's commissions and incentive expenditures to gross gaming revenue has jumped significantly from 8% in the same period last year and 9.3% last quarter to 12.6%.
Despite heavy pressure on the cost side, SJM still maintains its consistent style of operational cost control. The group's Q1 adjusted EBITDA only fell 4% year-on-year to HK$917 million (about $117.1 million), slightly higher than market consensus expectations by 1% but slightly below CLSA's forecast. More notably, with the complete closure of satellite casinos, the adjusted EBITDA profit margin has climbed to 15.5%, the highest level since the first quarter of 2017. However, this self-discipline achievement on the profit statement has not fully offset the pressure on the other end—the company recorded a loss attributable to shareholders of HK$62 million (about $7.9 million) this quarter, compared to a profit of HK$31 million in the same period last year. As of the end of this quarter, the company's interest coverage ratio is about twice, still within a controllable range, but has approached the critical value of the safety margin.
HK$3 billion in capital expenditures and the suspense of dividends in 2027
CLSA sounded the alarm in the report on SJM's capital expenditure plans for the next two years. The company has given clear guidance: capital expenditures of about HK$2 billion (about $255.4 million) in 2026, and about HK$1 billion (about $127.7 million) in 2027, of which the transformation of the Hengqin project into a hotel alone will account for about HK$1 billion. The total capital expenditure of about HK$3 billion (about $383.1 million) over two years has clearly exceeded the financial model forecast previously established by CLSA. Although the company expects the net debt to EBITDA ratio to drop to below seven times by the end of 2027, the brokerage warns that sustained high capital expenditures may pose a downside risk to the expected dividends in 2027.
PASA official website continues to track the competitive landscape and operator performance dynamics of the Macau gaming market, noting that SJM, in the context of competitors like Sands China increasing reinvestment efforts, is facing profit erosion and is becoming a key sample to test whether cost self-discipline strategies can hold market share in the high-end market attrition war.
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This article is from "PASA-Global iGaming Leaders" gambling industry news channel: https://t.me/pasa_news
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