Sands China’s operating profit soared 50% in the first quarter as the company outperformed the rest of Macau in the high-margin mass and slots segments to generate net revenues of US$2.72 billion.
The revenue represents a 35% increase year on year as the Hong Kong-listed subsidiary of Las Vegas Sands (HKSE: 1928) was able to leverage its outsized supply of gaming positions, hotel rooms and retail to continue shifting its strategic emphasis toward cash customers and away from the market’s historical dependence on VIP rolling chip play.
It showed in the 50% jump in EBITDA, which hit $938 million for the 12 weeks ended 31st March and handily beat the consensus of $880 million. The company played lucky with a VIP win rate of 3.2%, and that helped, too, adding $75 million to the earnings line in Union Gaming Research Macau’s estimation.
“We continue to believe that all of the major infrastructure already put into place (and continuing to be put into place) in mainland China is driving a much higher-quality customer to Macau, and driving them more frequently,” the firm said in a Friday morning note to investors. “With this in mind, we would expect SCL to continually adjust its gaming and non-gaming mixes to suit its customer base. We think the addition of Parisian and St. Regis, along with a potential redevelopment of Sands Macao in the out years, will keep the SCL growth story intact through the end of the decade.”
The company finished the quarter with 107 fewer VIP tables and 180 more cash tables compared to the same period in 2013. This included 33 tables dedicated to the bigger bettors constituting the lucrative premium-mass segment as part of what UGRM identifies as a “broader ongoing trend”.
“SCL, while operating fewer VIP tables, is increasing the value of each VIP table by working with a lower number (of higher quality) junkets. As such, we would look for VIP yield/table to continue to increase.”
VIP volume was up 10% company-wide despite the lower number of tables, led by the resort complex at Sands Cotai Central, which for the fourth consecutive quarter generated more rolling chip volume than the rest of the SCL portfolio.
Characteristically, company-wide mass table and slot revenues outperformed the market, up 54% and 24%, respectively, versus +39% and +10% for Macau as a whole.
