Sands China Profit Soars 50% on Mainland Holiday Makers

Sands China Ltd., the Macau casino operator controlled by billionaire Sheldon Adelson, posted a 50 percent gain in first-quarter profit as its resorts drew more mass-market gamblers in the world’s biggest casino market.

Adjusted property earnings before interest, taxes, depreciation and amortization at the Hong Kong-listed unit of Las Vegas Sands Corp. increased to $938.1 million from $626.4 million a year earlier, according to the parent company’s earnings statement today. That beat the $937.5 million median of six analysts’ estimates in a Bloomberg News survey.

“We’ve consistently grown faster than the Macau market in mass table games,” Adelson, the company’s chairman, said in a conference call today. He added that future growth will be enhanced by infrastructure investments in Macau, neighboring Hengqin Island and throughout Eastern China as they will “enable more people to more easily reach Macau.”

Sands China and Galaxy Entertainment Group Ltd. are among Macau casinos attracting more holiday-makers as they added shopping malls, theaters and exhibition halls in their resorts. An increase in the number of hotel rooms and an improved rail connection to Macau’s Cotai, Asia’s equivalent of the Las Vegas Strip, also lured more families on vacation from mainland China.

Net income climbed 66 percent to $751.9 million from $452.9 million a year earlier, while revenue rose 35 percent to $2.72 billion, based on U.S. generally accepted accounting principles. Parent Las Vegas Sands Corp. also reported first-quarter results that beat analysts’ estimates.

VIP Weakness

“It’s a very strong set of results, but the management seems to acknowledge there’s a short-term VIP market weakness,” Philip Tulk, a Hong Kong-based analyst at Standard Chartered Bank said by phone today. “In Adelson’s own words, it’s like a blip in the road.”

Sands China fell as much as 3 percent to HK$61.5 before trading at HK$61.7 at 2:40 p.m. in Hong Kong. The city’s benchmark Hang Seng Index dropped 1.3 percent.

Las Vegas Sands reported first-quarter profit of 97 cents a share, beating the 94 cent average of analyst estimates. Sales grew 21 percent to $4.01 billion, it said in a statement, beating projections of $3.9 billion.

The Las Vegas-based company is committed to spending $75 million a month under its $2 billion share buyback program this year, Adelson said on the call.

Parisian Resort

Sands plans to invest $2.8 billion to build the Parisian resort, featuring a replica of the Eiffel Tower, on Cotai. The resort, which will be its fifth in Macau, is on budget and scheduled to open alongside with St. Regis tower at Sands Cotai Central in late 2015, Adelson said.

Gambling revenue in Macau, the only place in China where casinos are legal, rose 20 percent to $12.8 billion in the first three months of 2014 from a year earlier.

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