UBS: Sands China (01928) EBITDA for the second quarter fell short of expectations, the worst since the pandemic

The Zhitong Finance App learned that UBS released a research report stating that it maintains the “buy” rating of Sands China (01928) and that the target price remains at HK$18.7.

Las Vegas Sands, the parent company of Sands China, announced that the adjusted EBITDA of Macau properties for the second quarter of this year was US$430 million, down about 24% year on year and about 32% quarterly, lower than market and UBS expectations of 505 million to $532 million, the worst since the pandemic. After deducting the impact of the VIP room win rate (1.4% in the second quarter), the adjusted EBITDA was US$517 million, down 8% year on year and 16% from quarter to quarter. The bank pointed out that World Cup events, seasonal decline, and low VIP and midfield win rates dragged down the season's performance. Among them, midfield gaming revenue fell about 5% quarterly, high-end midfield gaming revenue fell about 11% quarterly, and VIP room transcoding fell by about 18% quarterly.

Management emphasized that the underlying trends in various business segments are still strong, and monthly midfield gaming revenue in May reached a record high. Property upgrades and service level improvements have begun to bear fruit, driving the high-end sector to achieve significant year-on-year market share growth. The phased renovation of the Venetian Hotel is progressing as planned. It is expected to be completed during the 2028 Lunar New Year. 400 to 500 rooms will be suspended each season during the renovation period. Management expects operating expenses growth to slow in the second half of the year, the competitive landscape of the industry remains generally stable, and reaffirms the long-term goal of achieving Macau's quarterly property EBITDA of 700 million US dollars.