SANDS CHINA LTD.(01928.HK)：RENOVATION DISRUPTION-格隆汇

机构：申万宏源研究
研究员：贾梦迪

　　Sands China reported 2Q24 net revenue of US$1.75bn (-3% QoQ, +8% YoY), and hold-normalized adjusted property Ebitda of US$565m, recovering to 74% of 2Q19 level, lower than expectation, mainly due to the renovation disruption. We lower 24E EPS forecast from US$0.20 to US$0.14 (+69% YoY), 25E forecast from US$0.26 to US$0.2 (+36% YoY), and 26E forecast from US$0.28 to US$0.22 (+14% YoY). We lower target price from HK$36.5 to HK$20, and with 29% upside potential, we maintain Buy rating.
　　Resilient mass gaming business. During 2Q24, visitation to Macau recovered at c.79% of 2Q19 level. Total GGR (gross gaming revenue) improved 24% YoY and declined 2% QoQ. Total GGR, mass GGR, and VIP GGR recovered to 77%, 111%, and 38% of 2Q19 levels, respectively.
　　Company results. Sands China’s mass table revenue recovered 98% of 2Q19 level, with premium mass revenue surpassing 6% and base mass revenue recovering 91%. Premium mass revenue contributed 49% of total mass gaming revenue. Slot revenue surpassed pre-pandemic level by 3%; VIP rolling chip volume recovered 29%. Hotel occupancy was 95% with ADR of US$201.
　　Renovation disruption. The Londoner Macau’s earnings results were directly impacted during the quarter by the closure of The Londoner Grand casino, and the construction disruption of the conversion of the Sheraton Grand to the Londoner Grand. Disruption impact will peak in 3Q24, with new Londoner Grand casino and suite capacity and The Venetian Cotai Arena expected to be back online by December 2024. The renovation of Sheraton hotel is expected to be complete by 2Q25. The company aims the earnings power of the completed project would meet and even exceed that of the Venetian.
　　Maintain Buy. We lower target price from HK$36.5 to HK$20, and with 29% upside potential, we maintain Buy rating.
　　Risks: Lower-than-expected revenue growth.