Morgan Stanley upgrades Sands China rating
The company is expected resume dividends in 2025.
Macau.- Morgan Stanley has upgraded Sands China’s rating from equal-weight to overweight, citing several factors expected to boost the company’s market share and earnings from Q1. It cited the reopening of key facilities.
The report, authored by Praveen K. Choudhary, Gareth Leung, and Stephen W. Grambling also highlights the resumption of dividends in 2025 as a major catalyst for Sands China’s stock, which has underperformed by 31 per cent year-to-date (YTD). Before the pandemic, the company consistently paid annual dividends of HK$1.99 (US$0.26) per share.
The casino firm’s ratio of net debt to earnings before interest, taxation, depreciation, and amortisation (EBITDA) declined from 5.7 times at end-2022 to 2.8 times at end of first-half 2024, and shareholder equity turned positive at the end of first-half 2024,” the report notes.
It added that improvement in business conditions “should enable the company to resume HKD0.70 to HKD1.00 dividend-per-share in 2025, implying a 4.4 per cent to 6.3 per cent dividend yield” and identified Sands China as “the only company in Macau with identifiable catalysts.”
See also: Sands China contributes 24.5% of Macau GGR in Q2, analysts say
The bank expects Sands China to achieve net revenue of US$7.04bn this year, down 0.7 per cent from its previous estimate. The institution’s forecast for Sands China’s EBITDA this year is down 2.2 per cent on the previous estimate, to just under US$2.14bn.
