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Sands China net income jumps as Macao gambling peaks

By Wing-Gar Cheng (China Daily)
Updated: 2010-03-03 10:45
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HONG KONG - Sands China Ltd, Asia's biggest listed casino operator, said 2009 profit rose 22 percent on higher spending in the world's biggest gambling hub.

Net income increased to $213.8 million from $175.7 million a year earlier, Sands China, which has the second-biggest market share among Macao casinos, said in a statement to Hong Kong's stock exchange on Tuesday. That compared with the $225 million mean estimate of four analysts surveyed by Bloomberg.

The casino operated by billionaire Sheldon Adelson has gained 2.5 percent in Hong Kong trading after raising $2.5 billion in an initial public offering and convertible bond sale last year. In Macao, the only place in China where casinos are legal, revenue from baccarat, blackjack, slot machines and other games grew 9.7 percent to a record 119 billion patacas ($15 billion) last year.

"We believe Macao gaming is a compelling growth story," JPMorgan Chase & Co analysts Billy Ng, Steven Li and Joanne Cheung wrote in a note to clients. "We prefer Sands as it has a differentiated strategy, focusing on the mass market, proven execution ability and the most aggressive expansion plans in Macao."

Shares decline

Sands China fell 2 percent to HK$10.68 in Hong Kong after earlier rising as much as 2.75 percent. The stock has risen 12.5 percent this year compared with a 4.4 percent decline in the benchmark Hang Seng Index.

Sales at the casino operator, a unit of Adelson's Las Vegas Sands Corp, rose 8.1 percent to $3.3 billion. Earnings per share grew to 3.32 US cents from 2.80 US cents.

Sands China's adjusted earnings before interest, taxes, depreciation, amortization and rent (Ebitdar) climbed 17.9 percent to $809 million, the company said.

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"Our cost savings and efficiency programs remained an important component of our operating strategy throughout 2009," Sands China said. "These initiatives will allow us to expand our adjusted Ebitdar margins in the future and will provide enhanced operating leverage in the months and years ahead."

JPMorgan Chase's analysts rated Sands China "overweight" in new coverage of the stock, and set a share-price estimate of HK$13.5.

Casino operators in Macao may expect moderate growth this year, with the risks to long-term growth remaining high, Standard & Poor's said in a report. The operators may tap stock markets and refinance debt this year to improve liquidity, the report said.

"Competition will continue to be intense," said Standard & Poor's credit analyst Joe Poon.

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