Morgan Stanley cuts forecast for Sands China

Investment bank Morgan Stanley has issued a research report lowering its forecast for Sands China Ltd., citing a decline in the casino operator’s mass market share and lower actual share in the first quarter of 2024.

The report dropped the gaming operator’s estimated earnings before interest, taxes, depreciation and amortization for fiscal year 2024 by 8%, which is 10% below the market consensus. Morgan Stanley also forecasted earnings per share would be 14% lower for the period.

In the report, analysts said Sands China’s actual mass market revenue share declined in the first quarter of 2024. Morgan Stanley cut its dividend per share forecast for fiscal year 2024 to HKD0.50, representing a 2.6% yield.

Additionally, Morgan Stanley reduced its fiscal year 2025 EBITDA forecast by 3%, which is 5% below market consensus, and dropped its EPS forecast by 4% for that year. However, the broker revised upward its fiscal year 2025 dividend per share (DPS) forecast to HKD1, or a 5.3% yield.

“Sands would prioritize capital expenditure and the USD180 million bond due in August 2025,” the broker said in the report.

Morgan Stanley also lowered its target price on Sands China from HKD23.5 to HKD21, maintaining an Equal-weight rating. The broker believes the resumption of dividend payments in fiscal years 2025 and 2026 would be a key long-term positive for the stock, offering dividend yields of 5% and 11% respectively. Staff Reporter