[ET Net News Agency, 28 April 2020] Daiwa Research lowered its target price for Sands
China (01928) to HK$40 from HK$49.8 and maintained its "buy" rating.
The research house said the long-term, fundamental growth drivers of the Macau Gaming
sector remain intact. It believes the negative economic impact of COVID-19 offers Macau a
greater chance of expanding the IVS (Individual Visit Scheme), which would create upside
for visitations, GGR, and non-gaming revenue over 2021-23.
While all 6 operators would benefit from the IVS expansion, Daiwa believes Sands is best
positioned to expand market share under "social distancing" as it has the (1) most mass
gaming tables, (2) largest fleet of air, land, and sea transportation to fill in for
transport inefficiencies during initial reopening, (3) largest hotel room inventory (50%
of Cotai in total) to absorb utilisation losses amid deep sanitisation, and (4) greatest
access to manpower to be reallocated to perform premium mass host duties.
Daiwa revised down its 2020 earnings forecast to a net loss of US$784m (adjusted
property EBITDA of US$357m) and its 2021 EPS estmate by 20%. (KL)