UBS: Sands China (01928) second quarter EBITDA lower than expected, the worst since the epidemic.

UBS released a research report stating that it maintains a "buy" rating on Sands China (01928) with a target price of 18.7 Hong Kong dollars. The parent company of Sands China, Las Vegas Sands, announced that the adjusted EBITDA of its Macau properties in the second quarter of this year was 430 million US dollars, a year-on-year decrease of about 24%, and a quarterly decrease of about 32%, lower than the market and UBS' expectations of 505 million to 532 million US dollars, marking the worst performance since the outbreak of the epidemic. Excluding the impact of VIP win rate (1.4% in the second quarter), the adjusted EBITDA was 517 million US dollars, a year-on-year decrease of 8% and a quarterly decrease of 16%. The bank pointed out that the performance in the quarter was dragged down by the World Cup events, seasonal weakness, and a low win rate in VIP and premium mass. The casino revenue in the premium mass segment fell by about 5% quarterly, while the high-end premium mass casino revenue declined by about 11% quarterly, and the VIP rolling chip volume dropped by about 18% quarterly. Management emphasized that the underlying trends in all business segments remain strong, with the monthly casino revenue in the mass segment setting a new historical high in May. The upgrades of the properties and improvement in service levels have begun to show results, driving significant market share growth in the high-end segment year-on-year. The phased renovation of The Venetian hotel is progressing according to plan and is expected to be completed by the Chinese New Year in 2028, with 400 to 500 rooms being temporarily out of service each quarter during the renovation. Management expects a slowdown in operating expense growth in the second half of the year, with the industry competitive landscape remaining relatively stable, and reiterates the long-term goal of achieving quarterly property EBITDA of 700 million US dollars in Macau.