Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

Casino Business Review LLC

Extensive experience in marketing and development in the Asian gaming market

Global Gaming and Casinos Industry

Equity Bottom-Up

<ul>
<li>SJM has lagged other sector peers in price recovery since the end of the Beijing zero covid ban policy last Janaury 6th.</li>
<li>The company last year underwent a significant reordering of its business model which is not yet reflected in its ongoing momentum towards regaining positive EBITDA.</li>
<li>Trading volume indicates ongoing interest but stock in our view has not yet reflected the continuation of positive sales growth leading to EBIDA turning positive in forward quarters.</li>
</ul>


SJM has lagged other sector peers in price recovery since the end of the Beijing zero covid ban policy last Janaury 6th.
The company last year underwent a significant reordering of its business model which is not yet reflected in its ongoing momentum towards regaining positive EBITDA.
Trading volume indicates ongoing interest but stock in our view has not yet reflected the continuation of positive sales growth leading to EBIDA turning positive in forward quarters.


SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Macau's top gaming stocks <a href="https://www.straitstimes.com/business/companies-markets/macau-casinos-see-188-billion-wipeout-as-china-tightens-control" target="_blank" rel="noopener">lost</a> a record USD18 billion in combined market value on 15 September 2021 after the Macau administration <a href="https://www.ggrasia.com/public-consultation-re-gaming-law-review-from-sept-15/" target="_blank" rel="noopener">announced</a><a href="https://www.ggrasia.com/macau-may-end-casino-sub-concessions-directly-monitor-ops/" target="_blank" rel="noopener"></a> a 45 day public consultation period to discuss revisions to Gaming Laws, which comes as the June 2022 expiration deadline for existing gaming concessions loomed. Amongst others, the abolishment of the sub-concession framework (which could reduce current 6 operators to 3 operators), restriction on distribution of dividend, and Macau government's direct supervision of casino operations drew the most consternation from investors and analysts. The sweeping revisions compound the woes of Macau's casino operators, such as <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK) </a> and <a href="https://www.smartkarma.com/entities/sands-china-ltd-088dbd12-a0e9-4516-a68f-6a3cf8aa065d" target="_blank" data-smartkarma-citation="entities:28515:1" rel="noopener">Sands China Ltd (SCHYY US)</a>, which had already been badly affected by pandemic driven travel restrictions, and which obliterated their gaming revenues.While there were some improvements due to easing of travel restrictions for Mainland travelers in September 2020, gross gaming revenues (GGR) remain a shadow of its past.  The daily average of visitors to Macau during October's Golden Week was <a href="https://www.ggrasia.com/macau-oct-golden-week-daily-average-visits-dip-93pct-y-o-y/" target="_blank" rel="noopener">down 93.7%</a> on daily average in 2020. The decline coincided with new COVID-19 cases confirmed in Macau around the same period. Amongst its peers, <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a>  is the most highly levered and had already dodged a bullet by securing covenant waivers in April 2020 at the peak of the pandemic.In this Insight, we discuss the impact of the proposed revisions and subdued GGR recovery on <a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a>'s cash reserves, debt servicing ability, and whether there may be potential breaches of its financial covenants.

Macau's top gaming stocks lost a record USD18 billion in combined market value on 15 September 2021 after the Macau administration announced a 45 day public consultation period to discuss revisions to Gaming Laws, which comes as the June 2022 expiration deadline for existing gaming concessions loomed. Amongst others, the abolishment of the sub-concession framework (which could reduce current 6 operators to 3 operators), restriction on distribution of dividend, and Macau government's direct supervision of casino operations drew the most consternation from investors and analysts. The sweeping revisions compound the woes of Macau's casino operators, such as Wynn Macau Ltd (1128 HK)  and Sands China Ltd (SCHYY US), which had already been badly affected by pandemic driven travel restrictions, and which obliterated their gaming revenues.While there were some improvements due to easing of travel restrictions for Mainland travelers in September 2020, gross gaming revenues (GGR) remain a shadow of its past.  The daily average of visitors to Macau during October's Golden Week was down 93.7% on daily average in 2020. The decline coincided with new COVID-19 cases confirmed in Macau around the same period. Amongst its peers, Wynn Macau Ltd (1128 HK)  is the most highly levered and had already dodged a bullet by securing covenant waivers in April 2020 at the peak of the pandemic.In this Insight, we discuss the impact of the proposed revisions and subdued GGR recovery on Wynn Macau Ltd (1128 HK)'s cash reserves, debt servicing ability, and whether there may be potential breaches of its financial covenants.

Wynn Macau (1128 HK) - Gaming Law Revisions and Impact on Financial Covenants

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>At a time when the LSE has dumbed down the checks and balances for listed companies, now may be the right time to consider collapsing <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto (RIO AU)</a>'s DLC.</li>
<li>Re: Sep24 Nikkei 225 Rebal, long <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> vs. <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>, but this may not last. It has worked very well. </li>
<li>Unless we see a significant (and sustainable) reversal in <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a>'s US/Mexican ops in the interim results, now hardly appears the opportune time for a Smithfield IPO.</li>
</ul>


At a time when the LSE has dumbed down the checks and balances for listed companies, now may be the right time to consider collapsing Rio Tinto (RIO AU)'s DLC.
Re: Sep24 Nikkei 225 Rebal, long Ryohin Keikaku (7453 JP) vs. Fast Retailing (9983 JP), but this may not last. It has worked very well. 
Unless we see a significant (and sustainable) reversal in WH Group (288 HK)'s US/Mexican ops in the interim results, now hardly appears the opportune time for a Smithfield IPO.


Last Week in Event SPACE: Rio Tinto, Ryohin Keikaku/Fast Retailing, WH Group, ThaiBev/F&N, PCCW

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>Murakami's entity, City Index Eleventh, and daughter <a href="https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100U45I.pdf?sv=2020-08-04&amp;st=2024-07-29T08%3A22%3A26Z&amp;se=2029-07-30T15%3A00%3A00Z&amp;sr=b&amp;sp=rl&amp;sig=X40vp7lhAgBEyEZOwezOlfvKZ1e%2FyjZkQLMnZs1gx%2FI%3D" target="_blank" rel="noopener">reported</a> a 5.05% position in <a href="https://www.smartkarma.com/entities/heiwa-real-estate-co-ltd" target="_blank" data-smartkarma-citation="entities:749:1" rel="noopener">Heiwa Real Estate (8803 JP)</a>. The shares were purchased from 24 May to 22 July.</li>
<li>Murakami's average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to <a href="https://www.smartkarma.com/entities/taisei-co-ltd-aichi" target="_blank" data-smartkarma-citation="entities:3079:1" rel="noopener">Taisei Co Ltd (4649 JP)</a>.</li>
<li>Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.</li>
</ul>


Murakami's entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
Murakami's average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.


Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-1457'>China Oil And Gas</a></li><li><a href='#lucror-entity-3121'>Lippo Karawaci</a></li><li><a href='#lucror-entity-805'>SJM Holdings</a></li><li><a href='#lucror-entity-315'>Softbank Group</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.China Oil And GasLippo KarawaciSJM HoldingsSoftbank Group

Morning Views Asia: China Oil And Gas, Lippo Karawaci, SJM Holdings, Softbank Group

Hong Kong

SJM Holdings Limited offers amusement and recreation services.  The Company operates casinos, hotels, and other tourism-related facilities in Macau.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

SJM Holdings (880 HK)

SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build

SJM has lagged peers in price recovery in early post covid era but for H1 reported substantial gains in revenue and reduction of losses. It is...

Howard J Klein

Wynn Macau (1128 HK) - Gaming Law Revisions and Impact on Financial Covenants

Macau's gaming stocks lost USD18 billion in market value after the Macau administration announced proposed revisions to Gaming Laws. We discuss the...

Jason Yap, CFA

Last Week in Event SPACE: Rio Tinto, Ryohin Keikaku/Fast Retailing, WH Group, ThaiBev/F&N, PCCW

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder

Murakami's disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate...

Arun George

Morning Views Asia: China Oil And Gas, Lippo Karawaci, SJM Holdings, Softbank Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)