Sands China May Have Sales of $5 Billion in 2010

Sands China Ltd., the casino operator with the second-biggest market share in Macau, may have sales of $4.5 billion to $5 billion next year, according to the head of the company that controls it.

Sheldon Adelson, the billionaire chairman of Las Vegas Sands Corp., made the forecast in an interview at the construction site for a $5.5 billion casino resort in Singapore yesterday. Sands China had sales of $3.05 billion in 2008, according to Bloomberg data. Adelson, 76, didn’t comment on the 2009 results.

“Macau is going through record growth so I would expect Sands to do well in 2010,” Sean Monaghan, a Singapore-based investment consultant who previously worked for Merrill Lynch & Co. as a gaming analyst, said by e-mail today. Still, gross revenue is “much higher” than the net figure Sands reports, he said.

Las Vegas Sands Corp. is expanding in Asia, betting that rising incomes may fuel gambling and retail spending, Adelson said. Sands China, its Macau unit, raised $2.5 billion last month in a Hong Kong initial public offering to repay loans and resume construction the city, the world’s biggest gambling hub.

Sands China’s shares rose 1.3 percent, the first gain in five days, to HK$9.35 in Hong Kong today. The stock has fallen 9.9 percent from its IPO price of HK$10.38.

Gaming Revenue

Casino stocks have been dropping as investors “rotate out of high beta stocks before the end of the year,” Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd., said in a phone interview today. Beta is a measure of volatility or systemic risk of a security.

The Bloomberg/Standard Newspaper Macau Gambling Index that tracks 22 companies has declined 8 percent this month, set for its third monthly drop.

Investors also anticipate slower growth in casino revenue, Fischer said. “Recent monthly revenue growth of 40 to 60 percent is clearly not sustainable for the entire 2010 and we expect some slowdown. Nonetheless, we expect revenue growth of 17 to 20 percent in 2010,” he said.

Net revenue at Sands China rose 6.2 percent to $846 million in the three months ended Sept. 30 from a year earlier. The company benefited from the first full quarter of operations at the Plaza Macao, according to its prospectus.

Record new loans in China that have boosted spending and a recovery in visitor arrivals to Macau drove gaming revenue to climb more than 6 percent in the first 11 months, Portuguese news agency Lusa reported Dec. 1, citing data from the operators.

Singapore Casino

Casino gambling revenue in Macau may increase 8 percent this year as global economies recover, Lawrence Ho, chief executive officer of Melco Crown Entertainment Ltd., said in a Dec. 4 interview. Melco Crown is a casino venture controlled by Ho, son of Macau casino billionaire Stanley Ho.

Official figures showed third-quarter casino gambling revenue increased 22 percent to 32 billion patacas ($4 billion), the first growth in a year.

Sands’ Singapore casino may open in the middle of April, Adelson said. He said in a Nov. 30 interview that the project would open on schedule at the end of the first quarter of 2010.

“Singapore is a very important development for us,” said Adelson. “We don’t want to over-promise. We want to over- deliver.”

Postponement to April means the opening of the Singapore project, called Marina Bay Sands, has been delayed by more than a quarter after it was originally scheduled to open this year.

“The project is massive and so a few months’ delay can always be expected,” Monaghan said, adding that Marina Bay Sands is the “most expensive single property” that Las Vegas Sands has undertaken.

The land on which the project is built also had structural problems, including a previously unknown sea wall that cost the development a four-month delay to remove, he said.

The return on investment capital at Sands’ Singapore property may reach 20 percent, while occupancy at its 2,500 hotel rooms may amount to 90 percent, Adelson said.