Macau casinos unlikely to resume dividends soon, analysts say

The reasons cited include stretched balance sheets and restrictions imposed by debt covenants.

Macau.- Goldman Sachs has forecast that most Macau casino operators may not be in a position to resume dividend payouts in the near future. The reasons cited include stretched balance sheets and restrictions imposed by debt covenants.

The bank said Sands China and SJM Holdings are likely to be able to pay dividends until at least 2025 due to the constraints linked to their respective loan agreements. In May, Sands China extended its dividend-restriction period by 18 months as part of an amended facility agreement worth approximately US$2.49bn.

Goldman Sachs also noted that Las Vegas Sands Corp, the parent company of Sands China, is considering the possibility of increasing its equity stake in Sands China, currently at 69 per cent, should the stock price remain low.

The note was released following the institution’s investor tour of Macau on September 15, in which it visited all six casino operators and various newly-opened properties. Galaxy Entertainment Group stands out as it recently declared a special dividend of HK$0.20 per share, payable on October 27, following a first-half profit of HK$2.89bn (US$369m).

Macau’s casino operators remain optimistic about the potential for gross gaming revenue (GGR) growth, amid from gradual visitation recovery from non-Guangdong tourists. Analysts believe the spending behaviour of target clientele, particularly the middle class who can afford losing HK$30,000 to HK$40,000 per trip, may not be overly sensitive to economic fluctuations.

Goldman Sachs maintains its forecast that Macau gaming industry earnings before interest, taxation, depreciation, and amortisation (EBITDA) could return to 2019 levels, reaching US$9.1bn, provided that the mass-market segment recovers to 110 per cent to 120 per cent of pre-Covid-19 levels.