SJM Holdings H1 Loss Widens 62% as EBITDA Margin Expands

Kyle Kevin

iGaming Writer

Fact Checked

SJM Holdings’ loss widened 62% in H1 2026, yet its EBITDA margin expanded. The satellite casino exit is still reshaping every line of the income statement.

SJM Holdings’ H1 2026 loss widened 61.7% to HKD294.7 million ($37.6 million). The Hong Kong-listed operator posted no interim dividend. Revenue collapsed 20.8% to HKD11.59 billion. Net gaming revenue fell 22.5% to HKD10.56 billion. GGR dropped 18.5% to just above HKD12.08 billion. Market share shrank from 12.9% in H1 2025 to 9.8%. Yet adjusted EBITDA rose 3.3% to HKD1.70 billion. The margin expanded 3.5 percentage points to 14.7%. Chairman Daisy Ho called the first half the completion of a “significant structural transition.” SJM assumed direct management of its entire portfolio after closing all satellite casinos by end-2025. The periods are “not directly comparable,” the company warned. Satellite casinos contributed throughout H1 2025. They contributed nothing in H1 2026. That structural break explains both the revenue collapse and the margin gain. The market punished the stock anyway. Both Moody’s and Fitch downgraded SJM’s credit rating in May, citing elevated leverage and slower-than-expected earnings recovery.

SJM Holdings H1 Loss Widens 62% as Revenue Falls

The headline numbers are stark. Loss attributable to owners hit HKD294.7 million, versus HKD182.2 million in H1 2025. Aggregate net revenue of HKD11.59 billion was down from HKD14.63 billion. Net gaming revenue fell to HKD10.56 billion from HKD13.62 billion. GGR of HKD12.08 billion compared with HKD14.82 billion a year earlier. The revenue decline was not uniform across segments. Rolling GGR — the VIP segment — actually rose 32.9% to HKD1.46 billion. Non-rolling GGR, which covers mass-market tables, dropped 21.8% to roughly HKD9.62 billion. Electronic gaming GGR fell 29.1% to slightly above HKD1.00 billion. The divergence tells a story. VIP recovered. Mass-market and slots suffered. The satellite casino exit hit the mass segment hardest, as those venues had catered primarily to local and regional mass-market players. SJM’s market share compression was severe. At 9.8% of Macau’s casino GGR, the company trails all five rival concessionaires. In H1 2025, its 12.9% share placed it firmly in the middle of the pack. The 3.1 percentage point drop represents roughly HKD4.5 billion in lost GGR at current market size. That share is unlikely to return. The satellite model is gone. SJM must rebuild from its directly owned properties alone. The company acknowledged the structural break explicitly. “The first half of 2026 was its first full interim reporting period under a direct-management model,” the filing stated. “By contrast, satellite casinos had contributed to the group’s business throughout the first half of 2025.” The comparison, SJM said, is “not directly comparable.” Investors and analysts must adjust their models accordingly.

Why SJM Holdings EBITDA Margin Improved Despite the Loss

The margin expansion looks counterintuitive. Revenue fell 20.8%. EBITDA rose 3.3%. The margin improved 3.5 percentage points to 14.7%. SJM explained the gain as “continued improvement in the group’s operational efficiency.” The statement called it “particularly noteworthy against a broader Macau operating environment characterised by cost inflation and elevated reinvestment levels.” The satellite casino exit is the key. Those venues operated on thin margins under third-party management agreements. SJM collected a fee but bore limited operational control. The self-promoted model, while lower in absolute revenue, captures a higher share of each dollar wagered. Daisy Ho framed the transition as strategic. “This has strengthened our control over customer experience, cost structure and earnings quality across our properties,” she said. The numbers partially validate that claim. Adjusted EBITDA of HKD1.70 billion on HKD11.59 billion in revenue yields a 14.7% margin. In H1 2025, the margin was 11.2%. However, the improvement comes at a cost. The company lost roughly one-third of its market share. Revenue per available room and table productivity must rise substantially to offset that volume loss. SJM has implemented a group-wide cost-management programme. It targets productivity gains and operating leverage. The focus is converting revenue growth into “sustainable earnings.” For now, revenue is shrinking, not growing. The programme is buying time, not delivering growth. The company also faces market-wide headwinds. Macau’s GGR recovery has stalled below pre-pandemic levels. Competition from Cotai rivals with newer properties is intense. SJM’s portfolio skews older, with Grand Lisboa dating to 2007 and the peninsula properties even earlier. AGBrief tracks Macau operator earnings and market share trends.

Property Breakdown: Grand Lisboa Palace, Peninsula and Others

SJM’s property portfolio performed unevenly in H1 2026. The “other properties” segment — Casino Lisboa, Casino L’Arc Macau and Casino Oceanus at Jai Alai — was the standout. GGR surged 85.7% to HKD4.93 billion. Total revenue jumped 84.6% to nearly HKD5.17 billion. Adjusted property EBITDA rose 44.2% to HKD939 million. The gain came from two sources. Casino Lisboa expanded its gaming area. Casino L’Arc Macau became a self-promoted property on December 30, 2025, adding its full revenue to SJM’s books for the first time. The segment also includes the Jai Alai gaming area, which reopened after renovation. On the Macau peninsula, Grand Lisboa generated GGR of HKD3.84 billion, up 7.1%. Total revenue rose 6.6% to HKD4.01 billion. Adjusted property EBITDA was broadly flat at HKD860 million, versus HKD863 million a year earlier. The property is mature. Growth is incremental. The Cotai flagship told a different story. Grand Lisboa Palace posted GGR of HKD3.32 billion, up 12.9%. Total revenue increased 8.6% to HKD3.94 billion. However, adjusted property EBITDA collapsed to HKD22 million from HKD82 million. SJM blamed three factors: restructuring costs from satellite closures, increased customer reinvestment to support retention, and market-wide cost inflation. The reinvestment intensity is a strategic choice. SJM is spending heavily to keep players from defecting to Sands, Wynn and Galaxy. That spending hit the Cotai property hardest because it competes directly with those newer rivals. Rolling volume at Grand Lisboa Palace rose 16.9% to nearly HKD29.60 billion. The VIP segment is responding to “targeted product and customer-experience enhancements.” SJM has added table capacity at the resort, redeploying resources from former satellites. New areas include the Sky Phoenix West Tower VIP zone. Dragon Pavilion has been reconfigured for premium-mass business. On the peninsula, the second phase of the Crystal Palace gaming area at Hotel Lisboa Macau opened on August 10. That expansion adds capacity but also capital expenditure. Refurbishment of approximately 400 hotel rooms at Hotel Lisboa is complete, pending statutory inspection. Those rooms are owned by SJM’s controlling shareholder, STDM, and will be made available to the casino operator once approved.

Credit Downgrades and the Debt Picture

The market has not bought into SJM’s turnaround narrative. Moody’s downgraded SJM’s corporate family rating to B1 from Ba3 in May 2026. Fitch followed, cutting the long-term issuer default rating to B+ from BB-. Both agencies cited elevated leverage and slower deleveraging than previously expected. Fitch said SJM’s leverage trajectory is “no longer consistent with its previous rating level.” It expects EBITDA leverage at 7.8 times in 2026 and 6.5 times in 2027. That is an improvement from more than 9 times in 2025, but still “significantly higher” than Fitch’s downgrade threshold of 5.0 times. The agency pointed to “market share dilution from the closure of satellite casinos and continued lacklustre performance at Grand Lisboa Palace.” SJM’s market share of 9.6% in Q1 2026 fell below Fitch’s prior assumption of 10.7% for the full year. Moody’s was equally blunt. The B1 rating reflects “high credit risk” and “material probability of default risk over any 12-month horizon.” The outlook is stable, meaning no further downgrade is imminent. But the rating is deep in speculative territory. SJM’s balance sheet is leveraged but liquid. As of June 30, the company held nearly HKD3.49 billion in cash, bank balances, short-term deposits and pledged deposits. Debt totalled HKD30.22 billion. The revolving credit facility had HKD2.35 billion available. In January 2026, SJM completed a US$540 million senior notes issuance and added syndicated loan facilities. Those refinancings pushed near-term maturity risk down the road. Fitch projected adjusted EBITDA at HKD3.7 billion for 2026 and HKD4.2 billion for 2027, versus HKD3.0 billion in 2025. Revenue is expected to decline 17% in 2026 before returning to modest growth. Market share is forecast at 9.7% to 9.8% through 2028. The agency expects SJM to reduce debt over the medium term through improved operating performance and gradual free cash flow generation. That assumes the operating performance actually improves. For now, SJM is managing a portfolio in transition. The satellite casinos are gone. The self-promoted model is delivering margin but not volume. Grand Lisboa Palace is growing revenue but bleeding EBITDA. The peninsula properties are stable but not exciting. Daisy Ho’s promise of “sustainable long-term growth” depends on converting the current restructuring into genuine competitive position. The credit rating agencies are not convinced yet. SJM Holdings’ H1 results show a company that has successfully cut costs and streamlined operations. They also show a company that has lost significant market position and is still struggling to prove it can grow again.

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