SJM is the biggest beneficiary of the new version of the Gaming Bill – Investment Bank


Among Macau SAR’s six gaming licensees, SJM Holdings has benefited the most from changes included in the announced new version of the gaming bill, as they could help ease the group’s funding issues, officials said. analysts at investment bank Citi.

Last Friday, the Standing Committee of the Macau Legislative Assembly currently evaluating the bill to amend the current gaming law received a new version from government officials, with changes that would allow “satellite casinos” to continue their activities.

The administration had proposed banning operators from operating gaming areas on properties they don’t own, meaning they would either have to buy the sites from their third-party partners or increase their collaborations.

However, according to the new version, even if the ownership where the satellite casino is located is not fully transferred to the gaming concessionaire, the casino could continue to operate as a management entity, if a contract is established with the operator and approved by the general manager. .

The third-party promoted casinos operate under the license of gaming operator SJM Holdings Ltd, while the other four are linked to Galaxy Entertainment Group (GEG) and Melco Resorts and Entertainment Ltd.

According to a Dow Jones wire published by the Morning Star brokerage, shares of SJM Holdings rose 9.7% to then return to HK$3.26 (US$0.42), the largest increase in the valuation of the shares of the six gambling operators, and after 12 months period when its share price fell by 62% in value.

“The proposed changes aimed at satellite casinos should allay investor concerns about SJM potentially assuming significant personnel costs at satellite casinos,” Citi analysts said in a research note. “Most importantly, the changes should remove the last obstacle to its refinancing.”

A previous dispatch from SJM Holdings claimed the group had a ‘critical’ need to bolster its financial liquidity due to repeated operating losses as it remained the only gaming dealership to fail to break even in earnings. exploitation since the Chinese visit to Macau. resumed in September 2020.

SJM’s adjusted EBITDA increased 22% quarter-on-quarter to HK$474 million in the first three months of this year.

According to Bernstein, SJM plans to increase its outstanding bank funding from HK$13.3 billion to HK$19 billion, warning that under current conditions the company only has liquidity for 3 to 4 month.

The new version of the Gaming Law Amendment also shows that Macau authorities could consider a tax cut of up to five percentage points on a casino’s gross gaming revenue if casino operators RAS are able to bring in players from outside mainland China.

The Macau SAR government levies an effective tax rate of 39% on gross casino gaming revenue, 35% in direct government tax and the remainder in a number of levies to pay for a range of community and social causes. .

A tax of 1.6% is also collected by the authorities from concessionaires to finance the cultural, social, economic, educational, scientific, academic and philanthropic activities of the Macau Foundation, and an additional 2.4% is collected for development. urban and tourism and local social security. funds.

AL Committee Chairman Chan Chak Mo noted last Friday that gambling operators could see these two additional levies exempted if they can prove that they have attracted players from other jurisdictions to the SAR.

Citi viewed the proposal as “good news for all dealers,” with most game dealers reporting inventory valuation increases since the announcement.

JP Morgan Securities (Asia Pacific) also estimated in a news release that the tax cut would equate to a 12-15% increase in operators’ EBITDA for 2023 and 2024.


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