Date: 3 October 2024
Broker: MIB Securities (Hong Kong) Ltd
Overview of Sands China (1928 HK)
Sands China is a leading player in Macau’s gaming and hospitality industry. The company recently opened the Londoner Macao resort, which is expected to boost its market share ahead of the highly anticipated Golden Week holiday in October 2024. Sands China is well-positioned to capitalize on the recovery of Macau’s gaming sector following disruptions earlier in the year.
Macau’s Gaming Sector Performance
According to the Macau Gaming Inspection and Coordination Bureau (DICJ), the gross gaming revenue (GGR) for Macau in September 2024 came in at MOP17.25 billion, marking a 15.5% year-on-year increase, but a 12.7% month-on-month decline. Despite being the lowest monthly GGR since September 2023, the figure was slightly better than the consensus forecast of MOP17 billion.
The lower GGR in September was largely attributed to the impact of the super typhoon “Yagi,” which disrupted tourism demand earlier in the month. However, Sands China and other gaming operators remain optimistic about the upcoming Golden Week holiday, which is expected to drive significant tourism and gaming activity.
Impact of the Londoner Macao Resort Opening
Sands China officially opened the Londoner Macao gaming resort on 26 September 2024, just ahead of the Golden Week holiday (1-7 October). The resort is expected to enhance Sands China’s competitiveness in the Macau gaming market by attracting both high-end and mass-market tourists. The Londoner Macao is strategically positioned to cater to the expected surge in demand for luxury hotel accommodations during Golden Week, with most luxury hotels already sold out for the holiday period.
Market Outlook for Golden Week
The upcoming Golden Week holiday is anticipated to be a strong driver of tourism and gaming revenue for Sands China. Observations show that luxury hotel rooms have sold out, and the remaining Cotai hotel rooms are priced at over MOP5,000 per night, indicating high demand. Sands China’s new resort is expected to capture a significant portion of this demand, boosting both gaming and non-gaming revenues.
Valuation and Sector Positioning
The Macau gaming sector is currently trading at 9x FY25E EV/EBITDA. With the opening of the Londoner Macao and the expected boost from the Golden Week holiday, Sands China is well-positioned to regain market share in the competitive Macau gaming market. The company’s strategic investment in its new resort enhances its attractiveness to tourists, particularly as travel demand recovers.
Conclusion
Sands China is poised to benefit from the upcoming Golden Week holiday and the recent opening of the Londoner Macao resort. The company’s ability to capture market share through its luxury offerings and capitalize on high demand for gaming and hospitality services positions it for growth in the recovering Macau gaming sector.
