2023 results in line; strong CNY visitation further supports high-margin mass gaming
- 2023 scored positive results across all operating segments, with US$6.5bn revenue (+307%) and US$2.2bn adj. EBITDA, in line
- In particular, casino revenue up 411% to US$4.8bn, logging robust growth across all its properties amid rising visitation. Revenue also up strongly for rooms (+314%), mall (45%), food & beverage (+258%) and convention/ferry/retail (+238%)
- We maintain BUY with new TP of HK$43 (15x FY24 EV/EBITDA)
Sustained leadership in mass gaming. Sands China continues to hold onto its top position in Macau gaming, thanks to its commanding presence in the mass gaming segment (2023: 27% market share) that also generates higher profitability. The company’s EBITDA margin is amongst the highest in the sector. Together with US$1.2bn additional investment at The Londoner Macao to complete its renovation of Sheraton Hotel, Conrad Hotel and the Pacifica Gaming Hall by early 2025, the elevation of customer experience should further enhance its appeal to (premium) mass gamers ahead. By owning nearly 50% of the 5-star hotel inventory in Macau, and as a pioneer in retail (c.1.9m sf of shopping GFA) and MICE facilities (c.2m sf of exhibition & meeting space), Sands China should continue to leverage on its strong position to outperform in the medium-term.
Strong recovery in visitation. During the Chinese New Year (CNY) Holiday of 10-17 Feb 2024, total visitor numbers reached 1.358m (76% from Mainland China; 19% from HK), seeing average daily visitors up by 1.6-fold y-o-y to 170,000. In particular, Mainland visitor numbers of 129,000 per day already surpassed the 2019 CNY level. Average hotel occupancy rate also hit 95% during the period, well exceeded expectations. Such strong momentum should further beef up mass gaming revenue in Macau, and Sands China continues to stand amongst the key beneficiaries.