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HOTELS & TOURISM | Staff Reporter, Hong Kong
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Sands China 3Q14 EBITDA climbs 3% YoY and 1% QoQ

Growth was mainly driven by mass revenues.

Sands China's 3Q14 EBITDA increased 3% y/y and 1% q/q, while mass revenues were the main driver of growth, offset by declines in VIP.

According to a research note from Barclays, 3Q14 EBITDA of US$809 mn was +3% y/y and +1% q/q, hold-adjusted EBITDA was at US$772mn, down 2% y/y but +3% q/q.

Meanwhile, hold adjusted margin was 35.0% in 3Q14 vs 34.0% in 3Q13 and 33.3%in 2Q14.

Barclays noted that its EBITDA estimates are largely unchanged.

Here's more from Barclays:

We reiterate our Overweight rating on Sands China as we believe its existing Cotai casinos, its upcoming Parisian casino, and high mass exposure all continue to support growth. We expect 9% EBITDA CAGR over 2014-16E.

We expect c7% prospective dividend yield in 2014 and 2015 respectively, which we see as attractive. Our sum-of-the-parts based price target remains at US$54.10.

Mass remained the driver: Mass table revenue growth was +15% y/y but down 2% q/q; with base mass revenues (+16% y/y) growing faster than premium mass revenues (+13% y/y). Management said that there is much competition in the premium mass segment and therefore margins are lower. VIP revenues were down 22% y/y and down 9% q/q.

By property, Sands Cotai Central was the strongest performer with EBITDA growth still at +19% y/y and +7% q/q.

Parisian to open late-2015: Management believes a partial opening for the Parisian in November/December 2015 is possible, before a full opening in March 2016.

Smoking ban: Management said they do not see much impact from the smoking ban.

Support to Sands China dividends: Parent company Las Vegas Sands announced a 30% increase in its 2015 dividend, and authorised an additional US$2bn stock repurchase programme.

Management mentioned that they might obtain project financing for the Parisian project. Las Vegas Sands also mentioned that it is exploring opportunities in Japan, Korea and Vietnam. We believe all these provide support to our assumed 7% dividend yield for Sands China.

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