Fourth-quarter results for Sands China Ltd, the Macau operation of Las Vegas Sands Corp, saw a “big miss on margin,” said a Thursday note from banking group JP Morgan, after the parent issued group-wide figures overnight on Wednesday.
The bank said Sands China’s fourth-quarter luck‑adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$582 million were down 3 percent sequentially and down 2 percent year-on-year.
That was 5 percent below JP Morgan’s estimates “despite our recent cut,” said the institution.
“The culprit was margins”, wrote JP Morgan analysts DS Kim, Selina Li, and Lindsey Qian, describing Sands China’s fourth-quarter EBITDA margin as “really bad”.
Brokerage Jefferies stated in its Thursday note on Sands China: “Management attributed weak fourth-quarter Macau margins mainly to mix – driven by lower margin premium and super premium players –, reinvestment and opex [operating expenses].”
Jefferies analysts Anne Ling and Jingjue Pei added: “Management believes that Macau is still on track to achieve the US$2.7 billion annualised EBITDA target.”
JP Morgan observed that Sands China’s luck‑adjusted EBITDA margin for the three months to December 31 “slid 260 basis points quarter-on-quarter to 28.9 percent – the lowest since Covid‑19 (if not the past decade) – on a much weaker mix (i.e., exceptionally strong VIP, versus lacklustre mass/slot) and much higher opex.”
The institution added: “Even within mass, the mix has shifted toward super-premium and premium mass (likely generating around 30 percent margin) versus base mass (40-percent-plus margin).”
Play mix, ongoing opex
JP Morgan acknowledged that Sands China had gained 80 basis points of GGR market share quarter-on-quarter to circa 24.5 percent, “its highest level in about two years”.
But the institution said it was “low-quality share gain driven by VIP… up 89 percent quarter-on-quarter and 156 percent year-on-year… while mass/slot GGR only edged up 3 percent, in line with the industry’s”.
The banking group mentioned that Las Vegas Sands had commented on the fourth-quarter call that its Macau market share “appears to be stably moving in the right direction for each/every segment… allowing it to stabilise the promotional intensity”.
JP Morgan added: “Management hopes to optimise some of its promotional strategy into 2026, which in turn should improve EBITDA flow-through this year.”
The institution said in its latest commentary, Sands China’s operating expenses rose 18 percent year-on-year and 13 percent quarter-on-quarter, “versus our expectation of low-teens [percentage] growth.” Management did call out “events” as the key driver.
Some of those costs were associated with Sands China hosting preseason games for the National Basketball Association (NBA) in mid-October, and to Macau’s joint hosting in November of the 15th National Games of the People’s Republic of China. Aside from the six Macau casino concessionaires pledging funds to support the National Games, some also provided facilities to host certain sporting events.
The banking group estimated in the fourth quarter the company spent more that US$35 million on the NBA preseason games and the National Games, out of US$73-million sequential increase in opex, “against US$5 million to US$10 million of revenues,” but it said operating expenses “should ease” into the first quarter.
Though JP Morgan described NBA-related costs as “seasonal” for now, not “one-off,” as Sands China was scheduled to host NBA preseason games during fourth-quarter operations “for at least four more years” under a five-year deal that started in 2025.
