GGRAsia – Sands China posts first y-o-y revenue increase in 2 years

Sands China posts first y-o-y revenue increase in 2 years

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

United States-based gaming group Las Vegas Sands Corp says the net revenues of its Macau unit grew more than 18-fold in the second quarter of 2021 from a year earlier, mostly due it said, to a rebound in premium-mass revenue.

It was Sands China Ltd’s first year-on-year revenue increase since the second quarter of 2019, long before the Covid-19 pandemic began.

The Macau casino operator saw its net revenues hit US$855 million in the April to June period, a 10-percent increase from the preceding quarter.

Most of Sands China’s casinos reported higher revenue in the period, compared to first-quarter 2021. The exception was the casino at the Plaza Macao and Four Seasons Macao, which posted revenue of US$125 million in the three months to June 30, compared to US$170 million in the previous quarter.

Sands China’s adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to US$132 million in the second quarter, up from US$100 million in the first three months of 2021.

The second-quarter figure was also far better than the negative US$312 million EBITDA posted a year earlier.

“Sands China second-quarter 2021 EBITDA continued to sequentially improve, which was broadly in line with consensus but lower than our estimates due to weak results from… The Plaza/Four Seasons,” wrote analyst Andrew Lee of Jefferies Hong Kong Ltd in a Thursday note.

Sands China posted an aggregate loss of US$166 million in the second quarter of 2021, nonetheless an improvement on the US$213-million loss in the preceding quarter. The result was also an improvement on the loss amounting to US$549 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.

Macau market share ‘gain’

“In Macau, Sands gained gross gaming revenue [GGR] market share in the quarter (GGR market share in second-quarter 2021 was 24.6 percent versus first-quarter 2021 at 23.6 percent),” said a Thursday note from brokerage Sanford C. Bernstein Ltd analysts Vitaly Umansky, Kelsey Zhu, and Louis Li.

In a presentation issued alongside the results, Sands China said that although visitor arrivals to Macau during the period were at just 22 percent of pre-pandemic levels, mass gaming revenue was already 45 percent of 2019 levels.

The casino operator saw its premium mass gross gaming revenue (GGR) increase 8.6 percent sequentially in the second quarter, to US$365 million, showed its presentation. According to Sands China, that was about 57 percent of second-quarter 2019 levels.

“We remain enthusiastic about the opportunity to welcome more guests back to our properties,” said Mr Goldstein, “as greater volumes of visitors are eventually able to travel to Macau”.

In early June during an investor conference, Mr Goldstein had said he was “disappointed” about the pace of recovery in the Macau gaming market, but understood the Macau and mainland China authorities had opted for a safety-first approach amid the Covid-19 pandemic.

Luxury retail sales in Macau in the second quarter were already above the levels seen in 2019, the company said. Four Seasons luxury mall tenant sales hit US$7,267 per square foot, stated the company.

Group-wide capital expenditure in the first quarter was US$157 million, including construction, development and maintenance activities amounting to US$129 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 full quarter after a 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.

Singapore, group wide

In Singapore, where Las Vegas Sands operates Marina Bay Sands, net revenues fell from US$426 million in the first quarter of 2021 to US$327 million in the three months to June 30. Still, second-quarter revenue was 14-fold in year-on-year terms.

During the quarter, in mid-May, the casino at Marina Bay Sands was closed for 52 hours for deep cleaning, after two staff members tested positive for Covid-19.

Outside the quarterly reporting period, Marina Bay Sands’ casino closed from 6am on Thursday (July 22) and will remain so until August 5. The city-state’s Ministry of Health said there had been a fresh cluster of 11 Covid-19 infections linked to the casino.

Adjusted property EBITDA at Marina Bay Sands in the second quarter, stood at US$112 million, down from US$144million in the three months ended March 31. On the other hand, it represents a marked from the negative EBITDA of US$113 million posted a year earlier.

Maybank Investment Bank Bhd, which covers Las Vegas Sands’ Singapore duopoly rival, Genting Singapore Ltd, operator of the Resorts World Sentosa casino resort, said in a Thursday note, referring to management commentary from the U.S. firm regarding the Singapore market: “Las Vegas Sands said third-quarter 2021 will be similar to second-quarter 2021.”

Analyst Samuel Yin Shao Yang added regarding the Singapore resorts: “Operating capacity limits were raised back up to 50 percent in mid-June 2021 but dialled back down to 25 percent just recently.”

The Las Vegas Sands group made an operating loss of US$139 million in the second quarter, compared to a loss of US$757 million a year earlier. The group’s aggregate net revenue was US$1.17 billion, down slightly from the first quarter of 2021.

Net loss from continuing operations in the second quarter of 2021 was US$280 million, compared to US$841 million a year earlier, said Las Vegas Sands. Consolidated adjusted property EBITDA was US$244 million, compared to a negative US$425 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.”

The company says it anticipates the transaction will close in the fourth quarter of 2021.

(Updated, 3.10pm, July 22)