GGRAsia – Sands China 1Q adjusted EBITDA down q-o-q amid low hold

Sands China 1Q adjusted EBITDA down q-o-q amid low hold

Apr 18, 2024 Newsdesk Latest News, Macau, Singapore, Top of the deck

Macau casino operator Sands China Ltd saw its adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) fall by 6.7 percent quarter-on-quarter, to US$610 million, from US$654 million in the final three months of 2023. The result was up 53.3 percent from a year earlier, when restrictions linked to Covid-19 were relaxed in Macau, Hong Kong and mainland China.

On a United States GAAP basis, the firm’s net revenue fell 2.8 percent sequentially in the first quarter, to US$1.81 billion, according to an announcement filed on Thursday in Hong Kong, following the parent’s Wednesday results. Revenue rose by 41.6 percent in year-on-year terms.

Sands China’s net income rose 3.1 percent quarter-on-quarter, to US$297 million. The company had a net loss of US$10 million in first-quarter 2023.

“If we had held as expected in our rolling programme, our EBITDA would have been higher by US$31 million,” stated the parent Las Vegas Sands Corp, referring to VIP play.

Andrew Lee, an analyst at Jefferies Hong Kong Ltd, stated in a Thursday note, citing management discussion : “The lower earnings were due to property renovations at the Londoner [Macao], Cotai Arena closure, and significantly lower earnings at The Plaza and Sands Macao.”

Mr Lee added, referring to the British-themed Cotai property the Londoner Macao: “As the renovation disruptions persist this year, we expect this will continue to impact earnings.”

Marina Bay Sands reports high hold

At Las Vegas Sands’ other Asian operation, Marina Bay Sands in Singapore, hold on the rolling programme worked in the group’s favour.

Marina Bay Sands first-quarter adjusted property EBITDA was US$597 million, up 9.7 percent sequentially, and a 51.5-percent improvement from a year earlier.

“High hold on rolling play at Marina Bay Sands positively impacted adjusted property EBITDA by US$77 million,” noted the parent in a Wednesday filing in the U.S.

The Singapore operation’s net revenue rose 9.1 percent sequentially in the first quarter, to nearly US$1.16 billion. Revenue was up 36.6 percent from the prior-year period.

Las Vegas Sands paid a quarterly dividend of US$0.20 per common share during the first quarter. The parent’s next quarterly dividend of US$0.20 per common share will be paid on May 15. Sands China is yet to resume dividend payments.

In terms of the detail of the group’s first-quarter performance, in the Macau market the rolling chip programme mentioned by the group saw a 19.1 percent fall quarter-on-quarter in terms of volume at the Londoner Macao.

Such rolling chip volume was just under US$1.88 billion, versus US$2.32 billion in the fourth quarter last year.

At the Venetian Macao (pictured), the first-quarter rolling chip volume was just under US$1.04 billion, down 17.0 percent on the fourth quarter.

At Marina Bay Sands, first quarter rolling chip volume was US$8.24 billion, up 13.8 percent on the preceding quarter.

Grant Chum, president and chief executive of Sands China, stated on the parent’s first quarter earnings call: “VIP revenues in the [Macau] market as a whole grew faster than the mass revenues in the first quarter.”

First-quarter mass-market revenues “grew sequentially around 4 percent, and the overall GGR for the quarter grew 6 percent sequentially,” he noted.

According to official data, VIP revenue rose 13.2 percent quarter-on-quarter, to MOP14.38 billion (US$1.78 billion) in the three months to March 31.

Mr Chum also gave some commentary on the call, regarding Macau-market competition for players among the six concessionaires.

He stated: “I think promotional activities [in Macau] are relatively intense right now. Is it higher than fourth quarter? I don’t think so. But it has ups and downs. I think over time, there really isn’t any necessity in this market to be too aggressive on promotions.”

Sands China cost discipline

DS Kim, an analyst at JP Morgan Securities (Asia Pacific) Ltd said in a Thursday note: “Sands’ [China’s] group-wide operating expense came down 4 percent quarter-on-quarter to just above 90 percent of pre-Covid levels in the first quarter, which is pretty impressive considering inflation and salary hike.”

He added: “Its reinvestment rate – as loosely calculated from contra revenue account as a percentage of gross gaming revenue – stayed flattish again quarter-on-quarter, suggesting a discipline in promotional efforts despite ongoing market concern/debate on rising competition.”

Las Vegas Sands’ group wide first-quarter net revenue was US$2.96 billion, up 1.4 percent from US$2.92 in the fourth quarter. The parent reported net income of US$583 million, versus US$469 million in fourth-quarter 2023.

Robert Goldstein, chairman and chief executive of the parent, stated in prepared remarks: “In Macau, the ongoing recovery continued during the quarter.”

He also noted: “In Singapore, Marina Bay Sands once again delivered record levels of financial and operating performance.

“Our new suite product and elevated service offerings position us for additional growth as airlift capacity continues to improve and travel and tourism spending in Asia continues to advance.”

The group CEO added: “We repurchased US$450 million Las Vegas Sands shares under our share repurchase programme during the quarter. “We look forward to utilising our share repurchase programme to continue to return excess capital to stockholders in the future.”