It is “unclear if Sands China [Ltd] would declare an interim dividend in our view, as we expect the company to prioritise deleveraging this year,” says a Friday note from Singapore-based Lucror Analytics, referring to the Macau-casino operations unit of Las Vegas Sands Corp.
Lucror analyst Leonard Law added, referring to the Macau entity: “This is as the company is required to meet leverage covenants from the first quarter 2024 onwards under the terms of its credit facilities.”
Though the institution noted that Las Vegas Sands had “reinstated quarterly dividends amounting to US$153 million with a payout ratio of 49 percent”.
Las Vegas Sands had said in its second-quarter results issued on Wednesday that it would resume its quarterly dividend programme, at US$0.20 per common share. The next dividend will be paid on August 16 to the firm’s stockholders of record on August 8.
In May, Sands China had agreed to an 18-month extension of a dividend-restriction period as part of an amended and restated facility agreement worth circa US$2.49 billion.
The exception to such restriction was if – after giving effect to any such dividend payment – Sands China’s “sum of the aggregate amount of cash and cash equivalents”; and the “aggregate amount of the undrawn facility under the 2018 loan and unused commitments under the firm’s other credit facilities”, was greater than US$2.00 billion.
Lucror’s Mr Law observed in its note carried on the Smartkarma platform, that as of June 30 this year, Sands China’s net debt fell 8 percent, i.e., by US$701 million – to US$7.7 billion, “as the company repaid US$1.2 billion of revolving credit facilities using internal cash and cash flow.”
The analyst added that Sands China’s net debt to last trailing 12 months earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at 10.4 times.
Lucror said that while Sands China’s second-quarter casino gross gaming revenue (GGR) growth had “underperformed the industry” in Macau on a quarter-on-quarter basis, that was “in line with expectations,” as Macau peers such as Melco Resorts & Entertainment Ltd and Wynn Macau Ltd “likely ramped up their offerings after a soft first quarter”.
Mr Law added: “Still, Sands China’s GGR recovered to 71 percent of the second-quarter 2019 level, outperforming the industry,” which he said stood at 62 percent of pre-pandemic level.
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