Fitch Ratings Inc has revised its outlook on casino operator Las Vegas Sands Corp (LVS) and its Macau and Singapore units to ‘positive’ from ‘negative’. The ratings agency has also affirmed the group’s rating at ‘BB+’, according to a report published on Monday.
U.S.-based Las Vegas Sands is the parent of Sands China Ltd, which operates a number of casino properties in Macau, including on Cotai (pictured). The parent also controls Marina Bay Sands Pte Ltd, the promoter of the Marina Bay Sands casino resort in Singapore.
“The rating reflects the strong rebound in the Macau market and outperformance in Singapore compared with pre-pandemic levels,” stated Fitch.
It added: “The pace of recent growth in Macau bodes well for Las Vegas Sands, which is uniquely positioned for the return of the mass market, particularly the premium mass market, given its quantity and quality of gaming positions, hotel rooms, restaurants, and entertainment facilities.”
Sands China achieved adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$541 million in the second quarter of 2023. At Marina Bay Sands, quarterly adjusted property EBITDA reached US$432 million, up 35.4 percent in year-on-year terms.
In July, Las Vegas Sands also announced it would resume its quarterly dividend programme, at US$0.20 per common share.
Fitch said its expectations for improvement in Las Vegas Sands’ EBITDA leverage “includes assumptions for the reinstatement of the common dividend … (estimated approximately US$600 million annually) beginning in third-quarter 2023 and the resumption of a Sands China distribution in 2025”.
The institution now projects the casino firm’s 2023 EBITDA leverage at 4.0 times, and net EBITDA leverage at 2.2 times, “with further declines in gross leverage to the low-3 times range over the forecast horizon”.
The ratings agency also said the ‘positive’ outlook on Las Vegas Sands and its units reflected “the increasing visitation to and spend in Macau and Singapore compared to pre-pandemic levels”.
“Fitch expects this increase to continue to drive gaming and non-gaming revenues, which should return Las Vegas Sands to investment grade credit metrics,” it added.
The rating also took into consideration the “potential for weakness” in China’s economy, “as well as an increasingly competitive environment in Macau from new openings and expanded facilities”.
