Macau-based casino operator Sands China Ltd recorded a net profit of US$511 million for the second quarter of this year, a 19.7-percent increase over the corresponding period in 2018. Based on the generally accepted accounting principles used in the United States, Sands China’s net revenue reached US$2.15 billion in the second quarter, a year-on-year increase of 1.4 percent from its Macau casino and hospitality operations.
Sands China’s parent company, Las Vegas Sands Corp, announced its group-wide second quarter results after the stock market closed in New York on Wednesday. The Nevada-based casino operator reported a 71.6-percent jump in second quarter net profit.
The company, with extensive interests in Singapore and Macau, said its group-wide net profit attributable to shareholders increased to US$954 million in the second quarter compared to US$556 million in the second quarter of last year. That included a gain of US$556 million related to the sale of Sands Bethlehem, sold in March for a net price excluding some taxes of US$1.16 billion.
“We remain enthusiastic about our future growth opportunities in Asia, which will be enhanced through the introduction of our Four Seasons Tower Suites Macao later this year, the Londoner Macao throughout 2020 and 2021 and the expansion of Marina Bay Sands in Singapore thereafter,” said Las Vegas Sands chairman and chief executive Sheldon Adelson in prepared comments.
“We are also aggressively pursuing additional development opportunities in new markets, including in Osaka, Japan.”
Mass-market record in Macau
In Macau, the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 2.0 percent to US$765 million in the second quarter, up from US$750 million at the same stage last year.
Banking group Morgan Stanley said in a Wednesday note that Sands China’s adjusted property EBITDA was “broadly in line with [the] lower end of the consensus, but missed our and Bloomberg surveyed consensus of US$794 million and US$815 million, respectively.”
Analysts Praveen Choudhary, Dan Xu and Thomas Allen stated the miss was mainly due to declines in premium mass revenue and mass win rate.
Brokerage JP Morgan Securities (Asia Pacific) Ltd pointed out that Sands Cotai Central’s EBITDA “fell 22 percent quarter-on-quarter and 6 percent year-on-year to US$165 million, its lowest level in nearly two years.”
“The management admits (and we agree) that there are meaningful and on-going disruptions from the Londoner renovation works, on both VIP and mass businesses,” analysts DS Kim, Jeremy An and Christine Wang wrote. The rebranding of Sands Cotai Central into the Londoner is to be completed in phases throughout 2020 and 2021, “which could remain a near-term drag for Sands Cotai Central performance,” said the JP Morgan team.
EBITDA grew 21.9 percent at the Parisian Macao (pictured) compared to the corresponding period last year, from US$114 million to US$139 million; and EBITDA at the Plaza Macao and Four Seasons Hotel Macao grew 15.3 percent, from US$72 million to US$83 million.
The Venetian Macao, with about 654 tables and 1,696 slot machines, saw EBITDA improve by 1.5 percent to US$336 million in the second quarter, up from US$331 million at the same time last year.
Net revenue at the Parisian grew by a year-on-year 11.6 percent, from US$371 million last year to US$414 million this year.
The Plaza Macao and Four Seasons Hotel Macao saw a 13.4-percent improvement in net revenue, from US$186 million last year to US$211 million in the second quarter.
Sands China said mass-market table wins grew 5.2 percent in the past 12 months, reaching a record US$1.39 billion in the second quarter.
Driving growth at Sands China in the second quarter was a property-wide 14.7-percent year-on-year increase in base mass-market table wins, to an average win of US$8,636 per table a day. Sands China estimated that across all of Macau’s casino operators, the mass market (including tables and slots) had grown by about 11 percent.
The premium mass segment at Sands China has seen a decrease of 4.2 percent in the 12 months since the second quarter of 2018. The average table win per day was US$15,576.
The company said the contribution of its mass-market gaming table department to profit grew by 3 percentage points in year-on-year-terms, from 53 percent in the second quarter of last year to 56 percent in the last quarter.
During the same period, the contribution of VIP gaming to profit fell by 2 percentage points, from 9 percent to 7 percent. Rolling volume in the VIP segment fell by about 11.8 percent compared to the corresponding period last year.
Singapore EBITDA falls
At the Marina Bay Sands property in Singapore, EBITDA fell 6 percent in year-on-year terms, from US$368 million to US$346 million.
Las Vegas Sands recently announced it would spend US3.3 billion to expand the Singapore property to include an arena, MICE facilities, luxury retail and a hotel tower. The company estimates that US$1.2 billion of that sum will be spent this year.
Across the Las Vegas Sands group, total debt outstanding was US$12.0 billion as of June 30.
The company announced its next quarterly dividend of US$0.77 per common share would be paid on September 26 to shareholders of record at September 18. In the second quarter, the company paid a recurring quarterly dividend of US$0.77 per common share and increased its return of capital through share repurchases of US$180 million.
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"The Hong Kong protests may hurt Macau gross gaming revenue by about mid-single-digit (i.e., half of maximum visitation exposure), which should fade away gradually as people will find alternative ways to visit Macau”
DS Kim, Jeremy An and Christine Wang
Analysts at brokerage JP Morgan Securities (Asia Pacific) Ltd