Morgan Stanley released a research report stating that SJM Holdings (00880) is expected to complete the acquisition of satellite casinos, including Casino Kam Pek Paradise and Casino Oceanus, in the fourth quarter, which will further increase its debt ratio. The bank maintains a target price of HK$2.8 and an "Underweight" rating.

SJM Holdings reported Q3 EBITDA of HK$881 million, up 28% quarter-on-quarter but down 15% year-on-year, in line with the bank's and market expectations. The mass-market share declined by 110 basis points, primarily dragged down by its satellite casino operations.

The market expects full-year group EBITDA to reach HK$3.529 billion, implying a 14% quarter-on-quarter growth to HK$1.002 billion in Q4. However, Morgan Stanley considers these expectations overly optimistic.

Additionally, the group's net debt stood at HK$21.8 billion in Q3, with a net debt-to-EBITDA ratio of 6.2x over the past 12 months—the highest among Macau operators. Daily operating expenses remained flat quarter-on-quarter at HK$21.5 million. However, closing satellite casinos could add an additional HK$3.5–3.7 million in daily costs.

Management aims to enhance the performance of its Grand Lisboa Palace high-end segment next year by leveraging 100 new gaming tables transferred from satellite casinos and an experienced marketing team.