SJM HOLDINGS(00880.HK)：EXPECT CATALYST-格隆汇

机构：申万宏源研究
研究员：Jia Mengdi

　　SJM Holdings reported 4Q21 revenue of HK$2.4bn (+8% YoY, +1% QoQ), and adjusted Ebitda of - HK$611mn, lower than our expectation. We lower EPS forecasts from HK$0.10 to -HK$0.34 in 22E (+44% YoY), from HK$0.51 to HK$0.32 in 23E (+193% YoY), and introduce 24E forecast of HK$0.59 (+87% YoY). We lower target price from HK$6.6 to HK$5.2. With 18% upside, we maintain Outperform rating.
　　Mass driven play. During 4Q21, the company’s mass table revenue, slot revenue and VIP revenue recovered to 32%, 42% and 5% of the 4Q19 level, respectively.
　　Gradual ramp-up of Grand Lisboa Palace (GLP). The company’s new property Grand Lisboa Palace was opened on July 30th. During 4Q21, GLP operated 504 hotel rooms, including 72 rooms operated by the Karl Lagerfeld, opened on Dec 3. During 4Q21, the property recorded gross revenue of HK$246mn, and after adjusting the pre-opening expenses, its adjusted property Ebitda was negative HK$247mn. GLP will be launched in phases throughout 2Q22E, and later phases will include Palazzo Versace hotel, additional retail and F&B choices, etc.
　　Clarity on the gaming law would help to ease investor concerns. Macau’s current six gaming licenses are due to expire on June 26th, 2022. On Jan 14th, Macau Government released the details of planned amendments to the gaming law. The revised law will allow for a maximum of six concessions to be granted with a concession length of 10 years, etc. On January 24th, Macau’s Legislative Assembly passed its first reading of the draft bill on amendments to Macau’s gaming law.The bill will be sent to a sub-committee for detailed examination.
　　Maintain Outperform. With more clarities on the gaming law, we expect a valuation rerating in the short term for the gaming sector. The current low recovery also suggests great earnings upside potential. Currently mainland China visitors are required to provide a negative COVID-19 test result obtained within seven days of arrival in Macau, in order to travel here quarantine-free. Key catalysts include the resumption of e-visa processing under the Individual Visit Scheme and the return of package tours. We lower target price from HK$6.6 to HK$5.2. With 18% upside, we maintain Outperform rating.
　　Risks: Lower-than-expected recovery.