Fitch Ratings has downgraded the Long-Term Foreign-Currency Issuer Default Rating of SJM Holdings Limited from BB- to B+. The rating action stems from lower EBITDA growth and underperformance regarding market share in the Macau region.
According to the agency, the downgrade was driven heavily by the structural closure of third-party satellite casinos and slower-than-anticipated performance at the Grand Lisboa Palace (GLP) property.
Market Share Underperforms Estimates
SJM recently reported a first-quarter market share of 9.6% following the closure of its satellite casinos, falling below Fitch’s earlier tracking assumption of 10.7% for this fiscal year. While SJM executive management is aiming to lift that level by making greater use of returned satellite tables—including through new gaming areas at Grand Lisboa Palace and Casino Lisboa, Fitch stated it now expects the operator’s market share to remain capped between 9.7% and 9.8% through 2028.
The ratings agency noted that the downgrade also reflects its revised view that SJM’s leverage path no longer matches the previous rating level. Fitch Ratings stated it now expects leverage metrics to remain outside the BB- threshold over the next two years because EBITDA growth is likely to remain slower than previously anticipated.
Gradual EBITDA Outlook and Mass Volume Attrition
Despite the downgrade, Fitch indicated that EBITDA should continue to improve gradually as the company moves away from the low-margin satellite model. It also expects SJM to recover some business through self-operated casinos, including the recently acquired L’Arc Casino. Fitch sees further margin improvement coming from cost reduction through natural attrition and the redeployment of satellite staff, forecasting a Fitch-adjusted EBITDA of HK$3.7 billion in 2026 and HK$4.2 billion in 2027.
However, slower growth at Grand Lisboa Palace remains a central concern. Mass volume growth at the Cotai integrated resort eased from 17% in the second quarter of 2025 to 11% in the third quarter of 2025, and down to 3% in the fourth quarter of 2025, before turning into a 1% year-on-year decline in the first quarter of 2026.
The agency expects GLP’s market share to remain around the current mid-2% level, citing a highly competitive environment and limitations in the property’s product offering as factors weighing on its performance. The downgrade leaves SJM under renewed pressure to prove that its Macau business can recover at a faster pace, with leverage expectations set to remain outside the previous threshold over the next two years.
