Macau casino operator Sands China Ltd is likely to maintain in the next few years a leading market share of gross gaming revenue (GGR) in the city, at about 27 percent, said a Monday note from Sanford C. Bernstein Ltd.
The brokerage said such lead would be “driven by approximately 30 percent of mass GGR” accruing to the firm, thanks to factors including the ramping up of business at the Londoner Macao resort (pictured in a file photo) on Cotai, and the availability of luxury accommodation at the Grand Suites at Four Seasons.
The Londoner Macao, a remodelling of the former Sands Cotai Central resort, had a first-phase launch in time for Chinese New Year in February.
“We forecast [Sands China] to deliver 103 percent of 2019 revenue in 2023 and 124 percent of 2019 revenue in 2025, driven by Macau recovery, the leading mass market share, and the redevelopment of the Londoner and the Grand Suites at Four Seasons,” wrote analysts Vitaly Umansky, Louis Li and Kelsey Zhu.
Sands China would also “continue to lead the non-gaming segment in Macau,” asserted the Bernstein team.
Monday’s memo addressed what it said were market concerns about whether Macau’s regulatory environment might get tougher for Las Vegas Sands Corp-controlled Sands China and the other two Macau licensees with United States-based parent firms.
The brokerage suggested the Macau casino industry was “too small and not high profile enough” in global terms to “warrant being part of the geopolitical chess match” between the United States and China.
The Sanford Bernstein team observed, referring to recently-aired proposals for amendments to Macau’s legal framework for the casino industry: “One of the key investor fears is that China will somehow destroy value of the ‘foreign’ gaming operators in Macau by increasing ‘local ownership’, stopping dividends, forcing equity stake sales and making the regulatory environment tougher for them”.
The brokerage stated: “The notion that somehow the Macau gaming companies can be used by China as negotiating pawns in a geopolitical negotiation with the U.S. is definitely without merit.”
During Las Vegas Sands’ third-quarter earnings call on October 20, Robert Goldstein, chairman and chief executive, said in response to an analyst’s question, that he thought there was “no chance… whatsoever” that Sands China would not be operating casino business in Macau beyond June 2022 when its current Macau licence expires.
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