Sands China Earnings: Solid Recovery in Line, More to Come in 2024

Sands China’s fourth-quarter 2023 performance was largely in line with our expectations, which reflects a moderate sequential demand recovery in both gaming and nongaming segments, as visitation to Macao reached 90% of 2019’s level, up from 85% in the prior quarter. We expect the growth momentum to extend into the coming quarters, with rising airline capacity and various nongaming events across different casino properties helping support visitor growth. We raise our fair value estimate of Sands China to HKD 27.30 per share from HKD 26.50, after a minor tweak in our earnings forecasts. We believe Sands China will be the key beneficiary to capture further demand recovery in Macao, underpinned by its focus on the mass market, well-positioned properties with largest room counts in Macao, and successful track record in nongaming activities. We think the shares are undervalued as of market close on Jan. 25, 2024.