Sands income up on V.I.P. junkets | South China Morning Post
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  • Jan 28, 2015
  • Updated: 8:35pm

Sands income up on V.I.P. junkets

PUBLISHED : Thursday, 28 July, 2011, 12:00am
UPDATED : Thursday, 28 July, 2011, 12:00am

Success in the VIP junket business has pushed up the revenue of Sands China, which yesterday saw a nearly 10 per cent jump in its share price.

Shares in the Macau casino company, owned by Las Vegas-based Sheldon Adelson, yesterday rose 9.9 per cent to close at HK$23.40 - their biggest one-day increase since the company's inception in 2009 - after it reported that net income in the second quarter of this year doubled to US$267.4 million from the same period last year.

Total net revenue rose 16.3 per cent year on year to US$1.21 billion in the same quarter.

The Sands-owned Venetian Macao saw adjusted property ebitda (earnings before interest, taxes, depreciation and amortisation) rise 34 per cent to US$258.4 million, outperforming that of Sands Macau, which was up 18 per cent to US$95.6 million.

Venetian Macao also improved its adjusted property ebitda margin to 35.1 per cent, an increase of nearly 2 percentage points from the second quarter of last year.

Adjusted ebitda is ebitda revised to exclude the effects of mainly non-recurring items of revenue or gain and expense or loss.

A report by independent brokerage firm CLSA on the company said the stronger than expected growth of Venetian Macao was mainly due to its success on the VIP junket front.

The property ebitda of Venetian Macao, which reached US$258.4 million, exceeded CLSA's estimate by 11 per cent. Gaming revenues increased across the segment, including rolling chips, non-rolling chips and slot handle, although hotel occupancy slipped by 2.2 percentage points to 89.7 per cent.

'Better than expected earnings from Venetian shows that management's effort to improve junket relationship has started to bear fruit,' the report said. 'Going forward, management will continue to foster better relationship with the junkets, who dominate the VIP market in Macau.'

However, it said the Sands-owned Four Seasons Macau turned a weak property ebitda, which reached US$37.6 million, 15 per cent lower than CLSA's expectation, because of its 'poorer than expected' hold on the VIP segment.

Quarterly statistics from the Gaming Inspection and Co-ordination Bureau show 74 per cent of the gambling revenue of Macau's 34 casinos came from the high-rolling VIP customers, who are mainly from the mainland.

That explains the importance of junket operators, the middlemen who organise groups of VIP players to casinos, provide them with credit for gambling and collect their debts.

Adelson, who is also the chairman and CEO of Las Vegas Sands Corp, said in the company's quarterly report that the group had always been 'the most fervent believer in Macau's ability to succeed and flourish as a retail destination'. He also said that the group's faith in the city was now being rewarded.

Sands China is expected to open 1,800 hotel rooms and 100 gambling tables in the first quarter of next year in Macau's new Shangri-La and Traders hotels.

By the third quarter of 2012, another 2,000 hotel rooms and 200 gaming tables from a new Sheraton should be ready for operation.

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