Singapore casino resort Marina Bay Sands (MBS) is likely to return to pre-pandemic levels of business over the next two years, after the city-state entered this month its ‘living with Covid-19’ phase, including easing of restrictions on inbound travel by vaccinated people, says a Wednesday note from brokerage Sanford C. Bernstein Ltd.
“We expect a ramp up in business activity at Singapore integrated resorts to start in the second quarter, and accelerate into 2023,” wrote analyst Vitaly Umansky. Singapore is also host to Resorts World Sentosa, operated by Genting Singapore Ltd.
The institution noted that the local authorities had aimed to increase air passenger volumes to circa 50 percent of pre-pandemic levels before the end of this year, from about 18 percent of pre-crisis in mid-March.
“Marina Bay Sands’ appeal is its high margin and cash flow conversion with the property having generated approximately US$1.7 billion of EBITDA [earnings before interest, taxation, depreciation and amortisation] in 2019, at 54 percent EBITDA margin,” wrote Mr Umansky.
He noted that the property (pictured) – which has never had its business assets listed independently on an equity market – was fully owned by the parent, Las Vegas Sands Corp.
Sanford Bernstein forecast Marina Bay Sands’ annual EBITDA “to return to over US$1.7 billion by 2024, increasing to approximately US$1.9 billion in 2025, with EBITDA margin returning to 51 percent to 52 percent.”
Mr Umansky added the institution expected the property to make a “significant jump” in performance “once the phase two expansion is complete after 2025”.
He stated regarding the expansion, which is a commitment made to the Singapore government coinciding with the extension of Marina Bay Sands’ gaming rights to 2030: “We expect a low double-digit percentage return on investment on the US$3.2 billion Singapore investment.”
The Singapore Tourism Board recently reached an arrangement with Las Vegas Sands whereby the firm can if necessary delay the start of the extension work until April 2023.
Separately, Las Vegas Sands is engaging in a US$1-billion upgrade of Marina Bay Sands, to be completed in phases over 2022 and 2023.
The brokerage also gave some commentary on Las Vegas Sands’ Macau operating unit, Sands China Ltd.
It forecast that business to return US$3.4 billion of EBITDA in 2023, “assuming full resumption of travel conditions and no recession in China”.
The institution thought Sands China’s EBITDA might grow to over US$4.1 billion in 2025.
“With strong cash flow and limited capital expenditure commitment over the next few years, we expect Sands China to de-lever and return to paying dividends by 2024, while still having ample capacity to invest in Macau if the opportunity presents itself,” said Mr Umansky. The Macau casino operator last distributed dividends in February 2020.
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