July 26 (Bloomberg) -- Sands China Ltd., the Hong Kong-listed unit of billionaire Sheldon Adelson’s Las Vegas company, reported a 40 percent drop in second-quarter profit on an impairment charge, lower winnings and opening costs.
Net income dropped to $160.5 million from $267.4 million a year earlier, according to a Las Vegas Sands Corp.’s filing prepared in U.S. GAAP standard today. Revenue increased to $1.48 billion from $1.21 billion a year earlier.
Sands China booked an exceptional loss of $100.8 million for the capital expenditure it spent on two plots of land in Macau, Parcel 7 and 8. Macau officials in 2010 rejected the casino operator’s application to develop the plots and the company last month withdrew its appeal of that decision.
Growth is slowing in the world’s largest gaming hub as high-stake gamblers, or the VIPs who contribute more than 70 percent of Macau’s revenue, cut back spending amid a weaker Chinese economy. Smaller Wynn Macau Ltd. reported a drop in revenue for the second quarter.
The stock dropped 5.2 percent to HK$21.10 at 9:54 a.m. in Hong Kong trading. The benchmark Hang Seng Index lost 0.16 percent.
Growth in gambling revenue in the world’s largest gambling hub has slowed, rising 7.3 percent in May, the weakest pace since July 2009. Even though Macau’s gambling revenue increased 12.2 percent in June to 23.3 billion patacas ($2.9 billion), it still lagged the 15.3 percent median estimate of four analysts surveyed by Bloomberg News.
Shares in Sands China have risen 1.4 percent this year, compared with a 2.4 percent gain of the benchmark Hang Seng Index. The stock fell 2.8 percent to close at HK$22.25 yesterday, before the earnings announcement.
Sands China last week was given a three-year extension to build its fifth property in Macau after Sands Macau, The Venetian Macau, The Four Seasons Hotel Macau and Sands Cotai Central. The company will pay a penalty of 900,000 patacas for the delay in developing a plot called Parcel 3, where it will build the newest resort.
Sands China looks to begin construction on Parcel 3 by November, and the new project will target the mass-market and feature “family-oriented” facilities, according to a press statement.
The Parcel 3 resort would boost the company’s presence on Cotai, a strip of reclaimed land where casino operators including Melco Crown Entertainment Ltd., SJM Holdings Ltd., and MGM China Holdings Ltd., are awaiting land grants or approvals from the government to start their integrated resort projects. Sands China opened the first phase of Cotai Central in April.
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