Adelson Says Macau Stabilizing After China Unit Profit Falls 19%

Sands China Ltd. Chairman Sheldon Adelson Attends St. Regis Macao Hotel Opening

Macau is facing headwinds as China’s crackdown on corruption and a slowing economy have scared away high-end gamblers from the world’s largest gambling market.

Photographer: Lam Yik Fei/Bloomberg
  • Both Macau and Singapore post lower adjusted property earnings
  • Sands China `handsomely' beat market consensus: Deutsche Bank

Billionaire casino mogul Sheldon Adelson said Macau’s gambling market has stabilized after Las Vegas Sands Corp.’s unit in the city announced fourth-quarter earnings that fell less than analysts’ estimates.

Sands China Ltd. posted adjusted earnings before interest, taxes, depreciation and amortization fell 19 percent to $581.2 million in the fourth quarter, its parent said in a statement. The figure beat the market estimate of $555 million, according to Karen Tang, an analyst at Deutsche Bank AG.

Sheldon Adelson.
Sheldon Adelson.
Photographer: Lam Yik Fei/Bloomberg

“I thought we had either hit bottom in the mass market or were bottoming out,” Adelson said on a post-earnings conference call. “Some of the numbers put out and experienced through December and January” among other materials he has read, “indicate to me that that’s the case.”

Macau is facing headwinds as China’s crackdown on corruption and a slowing economy have scared away high-end gamblers from the world’s largest gambling market. While the city’s casino takings dropped 21.2 percent in December -- falling for the 19th straight month -- that represented the smallest year-on-year decline since last January.

Sands China has seen its share price slump 30 percent in 2015. Still, the stock gained 14 percent in the fourth quarter as the decline in mass-market revenue has narrowed. It rose as much as 4.9 percent to HK$25.75 in Hong Kong trading, reaching the highest intraday level since Jan. 6.

Handsomely Beat

Sands China’s earnings have “handsomely” beat consensus, said Karen Tang, an analyst at Deutsche Bank AG. “We expect Macau stocks to see a six to eight week short-term bounce into the seasonally strong Chinese New Year, and our top pick is Sands China.”

Las Vegas Sands, the world’s largest casino operator, earlier posted fourth-quarter sales and profit that missed analysts’ estimates as gambling revenue in the key markets of Macau and Singapore declined.

  • Sands’ adjusted earnings in Singapore fell 35 percent to $338.2 million.
  • In Las Vegas, adjusted earnings rose 25 percent to $97.4 million.
  • Profit excluding some items fell to 62 cents a share, lower than the average analyst estimate of 64 cents
  • Sales slumped to $2.86 billion, while it raised its quarterly dividend to 72 cents a share for 2016.

The higher dividend could signal management’s confidence in the outlook for Macau. Investors are looking for signs of a recovery after Adelson in December predicted a turnaround “in the near future, certainly in 2016.”

Sands, which has the most casinos among other foreign operators, plans to open later this year the $2.7 billion Parisian Macao, its fifth project featuring a half-size replica of the Eiffel Tower. Macau government has urged gaming houses to build more non-gaming entertainment facilities to attract tourists.

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