Sands eyes strong VIP gains despite credit crunch
Sands China's net income rose 41.2 per cent year on year to US$281 million in the third quarter with no sign that tightening credit on the mainland is hitting its VIP business, which relies heavily on private loan facilities from the mainland.
The Hong Kong-listed subsidiary of Las Vegas-based Sands, which is run by gambling tycoon Sheldon Adelson, said its new property, Sands Cotai Central, is on track to open in the first quarter next year. The property, which has 1,800 rooms and one casino, will help lift its VIP business in the fourth quarter, a Nomura report said yesterday.
Nomura quoted Sands China management as saying that the response for their new VIP rooms had been overwhelming. Junkets seeking new VIP rooms in Cotai would bring more high-net-worth punters to the VIP rooms run by Sands China in Macau, it forecast.
A drop in win rates at Sands Macao and Venetian Macao, however, dragged down the net revenue of VIP rooms in the third quarter. Sands Macao's win rate dropped to 2.65 per cent in the third quarter, from 2.98 per cent in the second quarter, while the win rate at Venetian fell to 2.66 per cent from 3.46 per cent.
The increase in mass market, slot handle and non-gaming divisions has partially offset the downturn in win rates at VIP rooms.
The hotel occupancy at Venetian rose to 94.1 per cent in the quarter from 90.1 per cent a year earlier while the average daily rate increased 7 per cent to US$232. Sands Macao saw its occupancy rate drop to 92.9 per cent from 96.6 per cent but the fall was compensated by a rise in room rates to US$251 from US$239.
Net revenue at the Venetian rose 11 per cent to US$687 million in the quarter while Sands Macao saw its net revenue increased 6.5 per cent to US$306 million. The Plaza Macao's net revenue jumped 5 per cent year-on-year to US$168 million while ferry and other operations rose 62 per cent to US$39.4 million.
Shares in Sands China dropped 3.4 per cent to close at HK$24.5 yesterday after the results announcement.
Decline in Sands China share price yesterday despite the company's strong earnings report