Bloomberg News

Sands China Climbs in Hong Kong as Quarterly Profit Doubles

July 27, 2011

(Updates with closing share price in second paragraph.)

July 27 (Bloomberg) -- Sands China Ltd., the Macau casino company controlled by billionaire Sheldon Adelson, rose by a record after reporting second-quarter profit doubled.

Sands China rose 9.9 percent, the most since its debut in November 2009, to HK$23.40 at the 4 p.m. close of trading on the Hong Kong stock exchange. Net income rose to $267.4 million in the three months ended June 30 from $133.6 million a year earlier as gamblers placed more bets at its Venetian Macao and Sands Macao venues.

Chinese gamblers are betting more on high-stakes baccarat and increasing spending on hotel rooms as the company taps growing demand for slot machines to boost Macau revenue. Casino gambling revenue in Macau, already more than four times that of the Las Vegas Strip, may grow by more than 43 percent this year, according to estimates by David Bain, an analyst with Sterne, Agee & Leach.

“This report could be the catalyst we have been waiting for at both Sands China and Las Vegas Sands,” Anil Daswani, an analyst at Citigroup Inc. in Hong Kong, said in a note to clients today.

Adelson’s Las Vegas Sands Inc., which yesterday reported a rise in its own earnings, owns about 70 percent of Sands China. The Hong Kong-listed Macau unit named Edward Tracy to become chief executive officer, with Adelson remaining as chairman.

Galaxy Macau

At Sands China’s Venetian casino in Macau, adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, climbed 34 percent to $258.4 million. Ebitda at the Sands Macao rose 18 percent to $95.6 million.

The opening of HK$15.5 billion ($2 billion) Galaxy Macau near the Venetian Macao on the Chinese city’s Cotai Strip benefited the Sands-owned casino, Adelson said on a conference call. Billionaire Lui Che-woo’s Galaxy Entertainment Group Ltd., part-owned by Permira Advisers LLP, has quadrupled in market value over the past year while Sands China has almost doubled.

Adelson, whose Marina Bay Sands is one of only two casinos in Singapore, predicted in May his company would generate more than $3 billion in cash flow this year as gambling in Asia accelerates and Las Vegas recovers.

Las Vegas Sands’ net income was $367.6 million, or 45 cents a share, compared with a loss of $4.68 million, or 1 cent, a year earlier, the Las Vegas-based company said today in a separate statement. The figures reflect preferred dividend payments. Profit excluding some items was 54 cents, more than the 44-cent average of 23 estimates.

Marina Bay

Quarterly sales jumped 47 percent to $2.35 billion, reflecting gains from Marina Bay Sands, which opened in April 2010. Singapore cash flow was $405.4 million in the quarter.

“Singapore is now the biggest profit contributor to Las Vegas Sands,” Jon Oh, a New York-based analyst for CLSA Asia- Pacific Markets who recommends buying the stock, said in a note to clients. “While market seasonality remains unclear, we urge investors to pay less attention to quarterly volatility and instead focus on the medium-term cash-flow potential in Singapore.”

The company named George Tanasijevich chief executive officer of the Marina Bay Sands, Chief Operating Officer Mike Leven said yesterday on a conference call. Tanasijevich had been interim CEO since January. The Wall Street Journal reported his permanent role earlier yesterday.

Las Vegas Sands rose 12 cents to $46.30 in New York Stock Exchange composite trading yesterday.

Las Vegas is staging an uneven recovery from a record two- year drop in gambling and conventions. Gambling revenue on the Strip increased 5.2 percent this year through May, according to the Nevada Gaming Control Board.

Las Vegas Sands said it has enough workers to start opening its project on sites 5 and 6 of Macau’s Cotai Strip from the first quarter of next year.

The company’s Macau cash flow rose 28 percent to $391.6 million. Macau, the only place in China where casinos are legal, saw gambling revenue surge 58 percent last year and 45 percent in the six months ended June 30.

--With assistance from Frank Longid in Hong Kong. Editors: Terje Langeland, Frank Longid

To contact the reporters on this story: Beth Jinks in New York at bjinks1@bloomberg.net; Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Frank Longid at flongid@bloomberg.net


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