Sands China is tipped to exceed its 2019 EBITDA in 2023, and grow considerably more by 2025, as Macau’s COVID-19 recovery hits top gear.
According to a Wednesday note from brokerage Bernstein, Sands will exceed EBITDA of US$3.3 billion, rising to US$4.1 billion but possibly as high as US$5 billion by 2025.
“Sands China is the largest gaming investor in Macau, having invested US$14.5 billion over the last 20 years and holding over 30% market share,” said Bernstein analyst Vitaly Umansky. “With the significant historical investment [and] limited capex commitment over the next few years, we expect Sands China’s Net debt/EBITDA to drop back to 2019 levels by 2024 and [the company to] restart dividends.
“The long-term fundamentals in Macau and Sands’ positioning are positive, our thesis on secular growth in Mass is intact and Sands is well placed to succeed in the premium mass and mass driven market.”
The encouraging outlook also extends to Singapore, where Las Vegas Sands is in the midst of a US$4.3 billion redevelopment of Marina Bay Sands (MBS), comprising US$3.3 billion for a new hotel tower and US$1 billion to upgrade existing facilities.
Umansky said gross gaming revenue at MBS should fully recover to 2019 levels by 2024 with EBITDA of US$1.74 billion by 2024 and US$1.9 billion by 2025.
“Marina Bay Sands was the single most profitable casino asset globally in 2019 and generated the highest EBITDA both in dollars and margin, and can revert to those levels over the next two years as Singapore travel resumes,” he said.
“We expect MBS to maintain its lucrative positioning in the future, especially long-term on the back of its large-scale renovation and expansion.
“While much will depend on the timing of recovery in Macau and Singapore (largely driven by the timing of reopening of travel), over the longer term, we expect recovery and growth in both markets.”
Bernstein has raised its target price for Las Vegas Sands from US$53 to US$56. Shares closed at US$47.50 on Wednesday (US time).
