[ET Net News Agency, 28 September 2020] Citi Research cut its target price for SJM
Holdings (00880) to HK$11.5 from HK$12 and maintained its "buy" rating.
The research house continues to rank SJM as its near-term top pick on three key reasons:
(1) it expects Grand Lisboa Palace (with 1,900 hotel rooms) to commence operations around
end-2020/early 2021 and to be a game-changer for SJM; (2) The results from the recently
held AGM should alleviate some investors' concern about the potential infighting between
some board members; and (3) With the right operating management team (led by a seasoned
veteran COO Frank McFadden and the recently hired Benjamin Toh) and the opening of the
Lisboeta at an adjacent land by a related party, Citi expects the ramp-up at Grand Lisboa
Palace to be relatively quick.
Citi believes there could be significant upside risks to consensus EBITDA forecasts on
Grand Lisboa Palace (Citi is forecasting an above-consensus EBITDA of US$450m in 2022
versus Wynn Palace's first full-year EBITDA of US$523m).
Reflecting its latest FY2020-21 GGR forecasts, Citi lowered its FY2020-22 earnings
forecasts by HK$167m to HK$1,479m. (KL)