公司点评：Sands China Ltd.：2Q23 Results：Biggest beneficiary of mass market recovery with non-gaming potential unlocked

SandsChinaLtd.(1928.HK) EquityResearch·CompanyResearch·Gaming 2Q23Results:Biggestbeneficiaryofmassmarketrecoverywithnon-gamingpotentialunlocked Buy(Maintain) Forecast&Valuation 2022A 2023E 2024E 2025E Revenue(HKDmn) 12,519.0 57,822.1 64,886.0 71,209.5 Growth(YoY%) -44.2% 361.9% 12.2% 9.8% Netprofit(HKDmn) -2,519.4 20,368.8 23,593.7 27,859.2 Growth(YoY%) - - 15.8% 18.1% EPS(HKD/share) -1.53 1.16 1.58 2.16 EV/AdjustedPropertyEBITDA(x)- 14.59 12.59 10.66 InvestmentThesis 2Q23earningsin-linewithexpectations.NetrevenuewasUSD1.63bn(+28%q-o-q)to76.1%of2Q19level,ofwhichnon-gamingrevenueaccountedfor25.5%(+5.1pctvs2Q19andflattishq-o-q).AdjustedpropertyEBITDAwasUSD540m(+36%q-o-q)to70.6%of2Q19level,implying33.2%margin(-2.6pctvs2Q19but+1.9pctq-o-q).WeseeEBITDAmargintocontinueexpandingwithcontinuedramp-upofmassmarkettrafficandrisingcontributionfromhigher-marginnon-gamingbusinesses. Leadingmassmarketrecovery:2Q23GGRgrew27%q-o-qtoUSD1.5bnto71%of2Q19level,outpacingthe2QMacaumarketrecoveryrateby9.1pctlikelyduetoitshighestmassmarketrevenueshare,leadingpositioninthemass/VIPbusinessratioandrelativelyfasterrecoveryintheoverallmassmarket.VIPandmassmarket(includingslotmachines)GGRwereUSD180mandUSD1.32bn,whichwere32.4%and85.1%of2Q19levels,respectively.Weattributethebetter-than-expectedrecoveryofVIPbusinessmainlyto:1)successfulconversionfromjunketVIPtodirectVIP;2)targetedmarketingtooverseasVIPclients.Webelievetheongoingrecoveryofnon-GuangdongvisitorswillbringmoremassmarkettraffictoMacau.Additionally,thecompany'sstrongappealtotourgroups,withonly3.7%oftotalvisitorsbeingpartoftourgroupsinJan-May2023(comparedto24.0%inthesameperiodin2019),presentsanopportunitytofurtherenhanceitscompetitiveadvantagebyincreasingtheproportionoftourgroupvisitors. Unlockingnon-gamingpotential:In2Q23,thecompanyoperates10,700rooms(90%ofthetotalroomcapacity),generatingUSD190mninroomrevenueto108.5%of2Q19level.Webelievethestrongrecoveryprospectisdueto:1)continuingrenovationofthepropertiesleadstoasteadyincreaseinaverageroomrates;2)Theoccupancyratesofthecompany’sfivepropertieshavesignificantlyimproved.Thecompanyisexpectedtoopennearlyallofitsrooms(approximately12,000rooms)in3Q23.Furthermore,thecompanycontinuestoinvestinpropertyupgradestocatertothehigh-endmarketdemand.In2Q23,thecompany'sretailbusinessrecoveredto81.9%of2Q19levels,witha100%occupancyrateforluxuryretailleasingatFourSeasonsPlace,indicatingstrongrecoverymomentuminhigh-endretail.In2H23,thecompanywillcommencerenovationsatTheLondonerMacaoPhaseII,introducingmorenon-gamingelements.Weanticipatesustainedgrowthinthecompany'snon-gamingrevenueasitcontinuesfullroomcapacityandfurtherenhancesitsfocusonthehigh-endmarket. EarningsForecast&Rating:1)Asaleaderinmassmarketandnon-gamingsectors,thecompanyispoisedtoexperiencerapidgrowthwithanticipatedsurgeintraveldemandandnewlyrenovatedproperty.2)Thecompany'shighroomcapacityallowsittoaccommodatemorevisitorsandfullybenefitfromthedemandrecoveryinpeaksummerseason.WehaverevisedournetrevenueforecaststoHKD57.8bn(upby13%)/64.9bn(upby7%)/71.2bn(upby8%)for2023-2025.Weraisethe2023-2025adjustedpropertyEBITDAforecaststoHKD20.4bn(upby16%)/23.6bn(upby7%)/27.8bn(upby8%),correspondingto2023-2025EV/EBITDAof15x/13x/11x.Wemaintaina'Buy'rating. Risk:Slower-than-expectedrecoveryinMacau'stourism,tighter-than-anticipatedmainlandvisapolicies,anddiversionofgamblingdemandtooverseasmarkets. 20July2023 ResearchAnalystShiruiOuyang(852)39823217 ouyangshirui@dwzq.com.hk PricePerformance MarketData Closingprice(HKD)27.65 52-weekRange(HKD)12.50/31.55P/B(X)-41.00 FloatingMarketCap(HKD 223,781.94 mn) BasicData BVPS(HKD,LF)-0.67 Liabilities/assets(%)106.63%TotalIssuedShares(mn)8,093.38Sharesoutstanding(mn)8,093.38 1/5 东吴证券（香港） 东吴证券（香港） 公司点评报告 资产负债表（百万美元） 2022A 2023E 2024E 2025E 利润表（百万美元） 2022A 2023E 2024E 2025E 流动资产 1,867.00 3,684.61 5,536.84 6,670.44 营业收入 1,605.00 7,413.09 8,318.72 9,129.43 现金 790.00 3,096.85 4,896.23 5,986.05 博彩净收益 947.00 5,495.90 6,223.37 6,886.49 应收账款 145.00 568.76 621.61 665.40 客房 184.00 806.73 810.59 849.19 存货 19.00 19.00 19.00 19.00 购物中心 354.00 569.09 608.93 631.22 其他流动资产 913.00 0.00 0.00 0.00 餐饮收入 67.00 403.37 445.83 509.51 会议,渡轮,零售及 非流动资产 8,695.00 8,222.65 7,688.75 7,143.2553.00138.00230.00253.00 其他 固定资产 7,904.00 7,439.91 6,966.73 6,484.45 博彩税 -515.00-2,803.73-3,167.84 -3,517.78 投资性房地产 598.00 552.52 506.05 458.57 存货成本 -26.00-114.96-119.36 -129.08 无形资产 31.00 68.22 53.97 38.23 职工薪酬 -1,032.00-1,065.18-1,149.24 -1,233.93 其他非流动资产 162.00 162.00 162.00 162.00 折旧及摊销 -750.00-747.31-758.90 -770.49 资产总计 10,562.00 11,907.26 13,225.59 13,813.70 其他支出-经营 -445.00-1,037.83-1,081.43 -912.94 流动负债 2,871.00 2,015.08 2,200.65 2,354.39 营业利润 -1,163.00 1,644.07 2,041.94 2,565.20 短期借款 1,963.00 18.00 18.00 18.00 其它收入 19.00 9.03 35.38 55.94 应付账款 908.00 1,997.08 2,182.65 2,336.39 财务费用 -444.00 -455.71 -448.76 -391.26 其他流动负债 0.00 0.00 0.00 0.00 利润总额 -1,588.00 1,197.39 1,628.56 2,229.89 非流动负债 8,391.00 9,397.96 8,906.34 7,115.32 减:所得税费用 6.00 -3.83 -4.19 -4.49 长期借款 8,218.00 9,218.00 8,718.00 6,918.00 少数股东损益