Sands China Ltd’s second-quarter property earnings before interest, taxation, depreciation, and amortisation (EBITDA) “miss is… too large to ignore”, despite the Macau casino operator suffering what analysts described as its worst-ever VIP luck, according to banking group JP Morgan.
The institution said it expected Sands China’s stock to “react negatively” to the firm’s second-quarter results.
Sands China’s quarterly property EBITDA declined 24.0 percent year-on-year, to US$430 million.
That was amid what JP Morgan also said was “a messy quarter” for Sands China, with an “ugly print” and where “bad VIP luck, poor mass hold, and bad timing all arrived together”.
Analysts DS Kim, Selina Li and Lindsey Qian made the comments in a Thursday note after Sands China’s parent, Las Vegas Sands Corp, reported the Macau operator’s results for the three months ended June 30.
“Property EBITDA of US$430 million was the lowest in three years since [post-Covid tourism] reopening, and even after adding back extremely unfavourable VIP luck,” which had subtracted U$S87 million, “luck-adjusted EBITDA of US$517 million still missed at 5 percent-plus below JP Morgan estimates,” the analysts stated.
They added: “The challenge is that it is tough to separate signal from noise.”
That was in a quarter “hit by exceptional VIP luck (the biggest impact ever in 24 years)” – a reference to the start of Las Vegas Sands’ Macau business –, “poor mass hold (the lowest since reopening), and a sizeable [FIFA] World Cup drag,” the analysts noted.
Nonetheless JP Morgan said it was staying overweight on Sands China’s stock “for now”.
This was, said its analysts, “not an earnings momentum call, but purely a yield/positioning call: the dividend floor remains significant at circa 8 percent yield on current dividend per share of HKD1.00 [US$0.13] per annum, with potential upside into financial-year 2027”.
JP Morgan also noted it was important to be able to understand “whether high-end demand softness” for Sands China’s gambling services was “temporary or more persistent, not only in VIP but also in premium mass,” which had been down 11 percent quarter-on-quarter and down 1 percent for “base mass”.
The brokerage noted Sands China’s second-quarter GGR had fallen 15 percent quarter-on-quarter, “materially underperforming the industry’s 7 percent quarter-on-quarter” decline, and “driving headline share down” by 210 basis points quarter-on-quarter, “the biggest decline” among the six Macau operators, to 23.7 percent of the market, “dragged severely by luck/hold”.
Macau-wide headwinds
Anne Ling and Jingjue Pei of brokerage Jefferies noted in a Thursday memo on Sands China: “The company will announce its full set of first-half 2026 results and propose an interim dividend per share in mid-August.”
Morgan Stanley Asia Ltd was somewhat subdued in its response to Sands China’s second-quarter numbers.
Analyst Praveen Choudhary and research colleague Anson Lee stated in a Wednesday note: “We don’t see Sands [China] gaining EBITDA share consistently despite intense reinvestment since June 2025.
“We downgraded the stock to equal weight in June… and downgraded the Macau industry in March.”
“Macau is challenged by more than the World Cup,” stated Morgan Stanley, referring to the fact a number of brokerages had said the global football tournament, which concluded on July 19, had depressed gross gaming revenue (GGR) in June and part of July.
The Macau market “is facing issues of intense competition in premium mass, with less support from base mass,” Morgan Stanley said.
The institution noted that in terms of Sands China’s player reinvestment in the second quarter, as a percentage of mass, “it did go up to 26.6 percent,” or up 130 basis points quarter-on-quarter, and up 340 basis points measured year-on-year.
“Operating expenditure is up 18 percent year-on-year,” stated Morgan Stanley, adding that it remained “concerned about second-half margin for the industry”.
In its memo, JP Morgan said: “The marginally constructive read is that cost/reinvestment discipline held up better than feared, with operating expenditure up only 1 percent quarter-on-quarter and reinvestment rate flattish quarter-on-quarter, if adjusted for hold” rates.
Jefferies noted, citing management comment: “Operating expense growth, driven by extended table operating hours and incremental sales and service headcount, is… expected to moderate in the second half of 2026, supporting a recovery in EBITDA margins as top line growth continues.”
The brokerage reiterated management remarks from the earnings call, that a Venetian Macao hotel-room renovation programme “is in progress with the target of completing all 2,900 upgraded” units “ahead of Chinese New Year 2028″. That year, the festival will fall in late January.
