GGRAsia – Sands China 1Q EBITDA up as premium mass rebounds

Sands China 1Q EBITDA up as premium mass rebounds

Apr 22, 2021 Newsdesk Latest News, Macau, Singapore, Top of the deck

Macau casino operator Sands China Ltd says its adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) more than doubled in the first three months of 2021 from the preceding quarter, mostly due to a rebound in premium-mass revenue.

The Macau unit of United States-based gaming group Las Vegas Sands Corp saw its adjusted property EBITDA hit US$100 million in the first quarter, compared to US$47 million in fourth-quarter 2020. The first-quarter figure was 49.3-percent higher than a year earlier.

Hong Kong-based analyst Andrew Lee of Jefferies LLC, said in a Thursday note that Sands China’s EBITDA had improved sequentially in the first quarter, to the “highest level since the pandemic started, and higher than both our and consensus estimates”.

First-quarter net revenues at Sands China fell by 4.5 percent year-on-year, to US$777 million, according to an earnings report released on Wednesday by the parent company. But the result was an increase of 15.1 percent from US$675 million in the fourth quarter of 2020.

Sands China 1Q loss

Nonetheless, Sands China posted an aggregate loss of US$213 million in the first quarter of 2021, an improvement on the US$246-million loss in the preceding quarter. The result was however worse than the loss of US$166 million recorded a year earlier.

“Demand for our offerings from our customers who have been able to visit remains robust,” said Las Vegas Sands’ chairman and chief executive, Robert Goldstein, in prepared remarks included in the latest results.

In a presentation issued alongside the results, Sands China said that although visitor arrivals to Macau during the period were just at 16 percent of pre- Covid-19 pandemic levels, mass gaming revenue was already at 38 percent of the 2019 levels.

The casino operator saw its premium mass gross gaming revenue (GGR) increase 12 percent sequentially in the first quarter, to US$336 million, showed its presentation. According to Sands China, that was about 43 percent of first-quarter 2019 levels.

A Thursday note from analysts DS Kim, Derek Choi, Livy Lyu at JP Morgan Securities (Asia-Pacific) Ltd stated: “The management does not see negative spillover impact from the problematic VIP segment, and it remains confident to attract more high-end players – including those who previously played in VIP/junkets – into its direct and premium-mass programme, as has been the case so far.”

Most of Sands China’s casinos reported higher revenue in the period, compared to fourth-quarter 2020. The exception was the casino at the Parisian Macao resort (pictured), which posted revenue of US$59 million in the three months to March 31, compared to US$69 million in the previous quarter.

Recovery path

“We remain confident in the eventual recovery in travel and tourism spending across our markets,” said Mr Goldstein, “as greater volumes of visitors are eventually able to travel to Macau”.

The company saw in the first two weeks of March improved volumes of people visiting its properties – including the casinos – when compared to February’s Chinese New Year holiday period, said the firm’s president Wilfred Wong Ying Wai on March 23.

Luxury retail sales achieved records in Macau in the first quarter, the company said. Tenants at Sands China’s retail malls saw their sales grow about two-fold year-on-year and Four Seasons luxury mall tenant sales were 16 percent higher than pre-pandemic levels, stated the company.

Group-wide capital expenditure in the first quarter was US$291 million, including construction, development and maintenance activities amounting to US$268 million in Macau, where the group has revamped and rebranded the Sands Cotai Central complex as the Londoner Macao.

The British-themed resort had its first-phase launch in early February, just ahead of Chinese New Year.

“We are fortunate that our financial strength supports our investment and capital expenditure programmes in both Macau and Singapore, as well as our pursuit of growth opportunities in new markets,” said Mr Goldstein.

Marina Bay Sands, group outlook

In Singapore, where Las Vegas Sands operates Marina Bay Sands, net revenues jumped from US$345 million in the fourth quarter of 2020 to US$426 million in the opening quarter of 2021. Still, first-quarter revenue was down 30.4 percent in year-on-year terms.

Adjusted property EBITDA at Marina Bay Sands stood at US$144 million, unchanged from the three months ended December 31. It represented a year-on-year decline of 48.9 percent.

Nonetheless a Thursday note from analysts Vitaly Umansky, Kelsey Zhu, and Louis Li of brokerage Sanford C. Bernstein Ltd stated: “Marina Bay Sands local demand continues to lead to profitability even as international business remains absent due to travel restrictions.”

Las Vegas Sands made an operating loss of US$96 million in the first quarter, compared to operating income of US$6 million a year earlier. The group’s aggregate net revenue was US$1.2 billion, down 15.6 percent from the first quarter of 2020.

Net loss from continuing operations in the first quarter of 2021 was US$280 million, compared to US$92 million in the first quarter of 2020, said Las Vegas Sands. Consolidated adjusted property EBITDA was US$244 million, compared to $349 million in the prior-year quarter.

Las Vegas Sands announced in early March it had agreed to sell its Las Vegas, Nevada venues and operations for US$6.25 billion. The casino firm said it was “focused on reinvestment in Asia and high-growth opportunities in new markets.”

Mr Goldstein said in late January that he expects would-be bidders in the upcoming retender of gaming rights in Macau, will be required to commit to a “substantial capital investment”. Macau’s current six gaming licences expire in June 2022.