‘A question of time’: Macau’s full recovery nears as Sands China halts losing streak while Blackpink, Jacky Cheung draw visitors
- Sands China earned US$187 million of net profit in the quarter to June 30, ending successive quarterly losses since the onset of Covid-19 pandemic
- The casino industry’s full recovery is just a question of time, says Andrew Lee at Jefferies
Sands China, Macau’s second-largest casino operator by market value, turned around its business last quarter to halt 13 straight quarters of losses through the Covid-19 pandemic, suggesting an imminent industry rebound in the world’s biggest gambling hub.
The casino operator earned US$187 million of profit in the three months to June 30, according to an exchange filing in Hong Kong on Thursday, versus a US$422 million net loss in the same period a year ago, and US$10 million deficit in the first three months this year. Net revenues jumped more than four times to US$1.62 billion in the latest quarter, it added.
“We were pleased to see the ongoing recovery now under way in all gaming and non-gaming segments progress during the quarter,” Rob Goldstein, chairman and CEO of its parent company Las Vegas Sands, said in the filing. “We remain deeply enthusiastic about the opportunity to continue our investments to enhance Macao’s tourism appeal.”
The turnaround ended cumulative losses of US$4.16 billion since the first quarter of 2020 when Covid-19 struck, triggering lockdowns and shutdowns that pummelled the economy. Since Beijing ended its zero-Covid policy in late 2022, visitor arrivals have improved and casino stocks have also advanced in Hong Kong.
“We expect the market to focus on management’s optimistic outlook,” said Andrew Lee, an analyst at Jefferies. “The trajectory may be uncertain, but the result is very certain” given the strong summer months with higher hotel occupancy and margins. The full recovery is “just a question of time”, he added.
Sands China fell 1.8 per cent to HK$27.65 in Hong Kong trading on Thursday, narrowing this year’s 8.7 per cent advance through July 19. The broader market also weakened, with the Hang Seng Index slipping 0.1 per cent and reversing from a rally of 1.4 per cent.
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What’s new in Macau: attractions that have opened in the city since the pandemic
June was a “stand out month” in terms of business volumes, Sands China told analysts in a conference call after the results were released, as official data showed visitor arrivals to Macau surged 481 per cent to 2.21 million from a year earlier, holding near the level in May.
Analysts expect to see more upside in revenues in the historically strong summer months. Morgan Stanley expects industry Ebitda to increase by 46 per cent quarter-on-quarter to US$1.6 billion, or about 70 per cent of pre-pandemic levels.
Sands China generated US$200 million of gross operating profit with concerts by Hong Kong Cantopop star Jacky Cheung pulling in the crowds, according to Lee at Jefferies. Business was getting closer to the 2019 pre-pandemic levels, with the mass gaming segment in June reaching 97 per cent of pre-pandemic levels, he added.
In recent months, Korean pop group Blackpink and Hong Kong singer Leon Lai have also held concerts at properties owned by Galaxy Entertainment and Melco Resorts & Entertainment. Local media reports speculated that Indonesian singer Nicole Zefanya will perform at Sand’s Venetian Macao as part of her world tour from August to October.
Meanwhile, Sands China said there was a strong rebound in visitors from outside of neighbouring Guangdong province, who made up 50 per cent of the arrivals in the June quarter, versus 30 per cent in the March quarter.
