Morningstar

Morningstar, Inc.

Equity Bottom-Up

Sands China is a strong contender in the Macau gaming sector with a strong presence in mass, retail, and non-gaming facilities and in Cotai. We estimate more than 85% of the group's gaming tables are in Cotai, a popular tourist destination with a critical mass of world-class integrated resorts that continue to take market share from casinos in the Peninsula. Sands China used to place lower priority of the lower-margin VIP segment, and this has changed. The group is committed to expanding and…

Sands China’s first-quarter revenue and adjusted EBITDA were 27% and 28% of our full-year estimates. We do not plan to make changes to our 2019 estimates and maintain our fair value estimate at HKD 45 per share. Sands China’s parent company Las Vegas Sands, estimated the Macau market’s VIP gaming revenue declined 11% year-over-year in the quarter, versus a 13% decline by DICJ and 28% decline for Sands China. The group’s VIP rolling chip volume was up 1.2%   year over year, which we think is…

We are making no change to our HKD 45 fair value estimate for narrow-moat Sands China. Although fourth-quarter revenue and adjusted EBITDA were better than our expectation, we expect earnings to deteriorate as a result of a slowing economy in China. On a U.S. GAAP basis, Sands China’s hold-normalized adjusted property EBITDA margin was 34.8% in the fourth quarter versus 35.0% in the third quarter and 36.0% in the fourth quarter last year. The weaker margin this quarter was due to higher-margin…

We maintain our fair value estimate for narrow-moat Sands China at HKD 42 per share after the release of third-quarter results. We think Sands China is now trading at an attractive discount for long-term investors. Our fair value estimate has already incorporated the impact of an economic downturn in the next few years. It is also based on the assumption that Sands China will be able to renew its license, albeit at a higher gaming tax rate. We believe the company is on track to meet our 2018…

Narrow-moat Sands China’s, or SCL’s, second-quarter update does little to alter our view, and we retain our fair value estimate of HKD 42. Adjusted property EBITDA grew 25% year over year to USD 750 million on the back of strong growth in both VIP and mass gaming segments. Meanwhile, hold-adjusted EBITDA margin rose 170 basis points year over year to 35.2% for the quarter. That said, we believe the strong results have been mostly priced in, and we still view shares as fairly valued.
Analyst:…

Hong Kong

Sands China Ltd. develops, owns, and operates integrated resorts, retail malls, and casinos. The Company also manages convention and exhibition halls in Macau.

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