New York-listed Las Vegas Sands Corp reports its 4Q 2011 results at market close Eastern Standard Time today (Wednesday 1st February).
Earlier LVS’s Hong Kong-listed unit Sands China Ltd announced its first interim dividend—HK$0.58—after saying it was sufficiently well capitalised to pay for future expansion in Macau. The payout will occur on or about 28th February, SCL added in a statement to the Hong Kong Stock Exchange.
“Sands China’s board of directors declared a HK$0.58 interim dividend, implying a 2.1% dividend yield on Sands China’s current share price,” said Cameron McKnight, Senior Analyst with Wells Fargo in a note to investors.
“While we believe investors were expecting a HK$1.00+ dividend, in our view this could represent a recurring interim dividend, implying an annualised dividend of HK$1.16 with a 4.25% yield. The HK$0.58 dividend equates to US$600mm of which US$422mm would go to the LVS parent. We expect Sands China to generate 2012 free cash flow of US$728mm and 2013 free cash flow of US$1.6bn.”
Union Gaming Research said in a note—issued during Chinese New Year on SCL’s impending dividend—that as of 3Q 2011 Las Vegas Sands had US$4.1 billion in cash and equivalents.
“On August 3, 2011 the company announced its intent to redeem all of the 10% Series A Cumulative Perpetual Preferred. We estimate these shares were redeemed for US$836 million in November, following the final preferred dividend payment. Pro forma for this we estimate LVS has US$3.3 billion in cash and equivalents, as follows: 1) Corporate US$185 million, 2) SCL US$1.9 million, 3) Marina Bay Sands US$520 million, and 4) U.S. operations USD680 million.”
“Due to certain covenant restrictions, refinancing plans and prospective project needs, some of the cash is not likely accessible for transfer back to Corporate, and management may simply not be willing to move cash from other entities,” added Union.
Sands China has recently stepped up its marketing effort in the dominant and—from the operators’ perspective—highly competitive VIP baccarat segment in Macau, attracting new junkets and welcoming back former junket partners. Union Gaming said in another note that figures from Macau’s gaming regulator the Gaming Inspection and Coordination Bureau (DICJ) showed a 13% year-on-year increase in the number of junkets in Macau during 2011. That took the total to 206 shared by a market that has 34 casinos. This is around a 130% increase from the junket base in 2005, when there were 96 junkets shared between 17 casinos, added Union.
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