Sands China Ltd., the Macau casino operator controlled by billionaire Sheldon Adelson, surged to a record in Hong Kong after reporting third-quarter earnings that beat analyst estimates as its new resort drew more gamblers.
The stock rose 9.2 percent to close at HK$58, the highest level since its November 2009 listing. The shares have climbed 71 percent this year, compared with a 3 percent gain for the city’s benchmark Hang Seng Index.
Sands China, Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd. have been expanding on Cotai, a piece of reclaimed land envisioned to be Macau’s equivalent to the Las Vegas Strip. Sands Cotai Central, the operator’s latest resort which opened in April last year, has added shops, entertainment shows and hotel rooms to attract middle-class gamblers to the world’s largest casino hub.
“Sands has been very strong, especially on the mass-market segment,” Grant Govertsen, a Macau-based analyst at Union Gaming Group, said by phone today. “The company has the biggest footprint in non-gaming entertainment which helps to draw a lot of family holiday-makers.”
Adjusted property earnings before interest, taxes, depreciation and amortization increased 62 percent to $785.3 million in the third quarter, the company said in a stock exchange statement. That compares with an average estimate of $732 million from 10 analysts compiled by Bloomberg.
“The sector is on fire again,” Govertsen said. “Even the second or third-tier Macau related stocks are enjoying the strong momentum.”
Neptune Group Ltd. and Success Universe Group Ltd., which have investments in the gaming and cruise ship businesses, surged 17 percent and 8 percent, respectively. MGM China Holdings Ltd. climbed 4.2 percent and Galaxy Entertainment rose 4.1 percent.
Sands China has more than 9,000 hotel rooms and about 40 percent of Macau’s four and five-star offerings, according to Deutsche Bank AG estimates.
“Its massive room inventory gives it an unparalleled strategic advantage in Macau,” Karen Tang, a Hong Kong-based analyst at Deutsche Bank, wrote in a note published today, raising the company’s target price to HK$65 from HK$53.1, while keeping a “buy” rating.
Net income for the Hong Kong-listed unit of Las Vegas Sands Corp. rose 89 percent to $617.9 million from $326.7 million a year earlier, according to its parent’s filing in U.S. GAAP standard. Revenue climbed 43 percent to $2.34 billion. Parent Las Vegas Sands also reported earnings above estimates.
The company plans to invest another $2.8 billion to build a new Macau resort, to be named the Parisian, which will have a replica of the Eiffel Tower.
Gambling revenue in Macau, the only place in China where casinos are legal, gained 17 percent to 260.6 billion patacas ($33 billion) in the first nine months of this year, after raking in $38 billion in 2012.