Sands China Earnings: Solid Recovery Continues, Rising Base Mass Volume a Key Positive

We maintain our Sands China fair value estimate of HKD 26.50, following in-line third-quarter results, which reflect continued demand recovery in both gaming and nongaming segments. We think the stronger rebound of base mass volume is a key highlight, helping to ease market concerns over a slower recovery of group tour volume and base mass traffic. We believe Sands China’s focus on the mass market, and its largest room counts in Macao—as well as a successful track record in nongaming activities—make it the key beneficiary to capture further demand recovery in Macao. Our long-term industry gross gaming revenue, or GGR, and Sands China profit forecasts are unchanged. We think the shares are undervalued as of market close on Oct. 19, after the recent share price weakness.