Sands China Q3 Reports Loss Despite Minor Sales Recovery

In the third quarter, Sands China Ltd, the Macau unit of the United States-based casino company Las Vegas Sands Corp, announced a wider loss compared to the duration from April to June. Despite a minor sales recovery led by better luck in the VIP market, that was.

In the third quarter, the firm reported a net loss of US$ 562 million, marginally worse than the US$ 549 million loss in the second quarter. The outcome was a far cry from the US$ 454 million net income that Sands China posted in the third quarter of 2019.

Net sales in Singapore, where Marina Bay Sands operates Las Vegas Sands, soared from US$ 23 million in the second quarter to US$ 281 million. The change was attributed to the fact that the property was closed temporarily between April and the end of June. Still, in year-on-year terms, third quarter revenue was down 64.6 percent.

Earnings before interest , tax, depreciation and amortisation ( EBITDA) of adjusted assets at Marina Bay Sands stood at US$ 70 million for the three months ended 30 September. It reflected an 83.9 percent decrease year-on-year, but a sequential improvement in the second quarter of 2020 over negative EBITDA (-US$113 million).

The Macao operations of Las Vegas Sands were the main contributor to the Group’s total net loss of US$ 731 million in the third quarter, down from US$ 820 million in the second quarter.

In a note commenting on the latest results of the Sands company, brokerage Sanford C. Bernstein Ltd reported that the third quarter EBITDA of Las Vegas Sands (-US203 million) beat consensus estimates… powered largely by outperformance in Singapore.

Sands China’s third quarter EBITDA of -US$233 million (-131 percent year on year) was also above consensus estimates (-US$242 million), analysts Vitaly Umansky, Kelsey Zhu and Tianjiao Yu had reported.

Sanford Bernstein noted that for the quarter, operations in both Macau and Singapore had seen strong VIP holds: 4.07 percent for Sands China and 4.23 percent for Marina Bay Sands). “But the numbers themselves were not critically important as investor focus is on recovery trajectory,” the brokerage said.

In a commentary focused exclusively on the third quarter results of Sands China, brokerage Jefferies Group LLC said that the losses reported by the firm were “not a surprise,” as investment analysts had already widely predicted. “However, management appear relatively positive on the outlook,” noted analyst Andrew Lee.

For the three months ended September 30, 2020, Sands China’s loss on adjusted property EBITDA was US$ 233 million, 25.3 percent smaller than in the second quarter.

At Sands China, net sales fell 91.9 percent year-on-year to US$ 171 million , down from US$ 2.11 billion a year earlier. Yet the company saw its sales more than triple from US$ 47 million in the second quarter.

The earnings presentation released with the results stated that “the low levels of revenue generated in the third quarter of 2020 reflect meaningfully reduced visitation to the market.”

Better luck in its VIP table game segment was the big explanation for the rebound. Sands China posted US$ 1.27 billion of rolling chip volume in the second quarter, but its win percentage was negative (-0.59 percent). The rolling chip volume for VIP table games fell to US$ 1.05 billion in the third quarter, but the rolling win percentage swung to 4.06 percent.

Qualified residents of the neighbouring mainland province of Guangdong have been permitted to apply for an exit visa for tourist trips to Macau from 26 August as part of the travel easing steps following the initial impact of Covid-19, either as part of a tour group or under the China Individual Visit Scheme programme. Since September 23, the measure has been expanded to citizens of other mainland regions.

Results in the mass market segment of Sands China have increased, with the company reporting a US$ 55 million quarterly table game win, up from just US$ 10 million in the previous quarter. Sands China had posted US$ 1.44 billion in winning mass market table games a year earlier.

The hotel segment of Sands China also increased quarter on quarter, with occupancy bouncing from just 2.5 percent in the second quarter to between 7.6 percent at the company’s Venetian Macao flagship and 14.5 percent at Sands Macao in the three months ended September 30th.

In a press release released alongside the results, the chairman and chief executive of Las Vegas Sands, Sheldon Adelson, said: “I am pleased to say the recovery process from the Covid-19 pandemic continues to progress in each of our markets.”

He added: “We are fortunate that our financial strength supports our previously announced capital expenditure programs in both Macau and Singapore, as well as our pursuit of growth opportunities in new markets.”

Community capital expenditure amounted to US$ 376 million in the second quarter, including US$ 279 million in construction, production and maintenance activities in Macau, where Sands China is rebranding Sands Cotai Central as Londoner Macau.