JPMorgan released a research report indicating that Sands China Ltd's (01928) performance in the last quarter of the previous year fell short of expectations. The decline in gross profit was primarily attributed to an unfavorable business mix, weaker-than-expected mass-market revenue performance, and increased operational costs. The bank had already revised down its forecasts for the company prior to the earnings release; consequently, this adjustment involved only a minor reduction of approximately 3% to future EBITDA projections. JPMorgan maintains an "Overweight" rating on Sands China but has lowered its target price from HK$23 to HK$22.
The report suggests that although Sands China's stock price has declined by 10% over the past month, underperforming against a 2% rise in the Hang Seng Index and largely flat performance of peers during the same period, this market reaction is considered excessive. The bank attributes the company's weak fourth-quarter performance mainly to seasonal factors, such as NBA preseason games, or non-recurring elements like the disappointing mass-market segment results and the impact of the National Games.
JPMorgan continues to anticipate market share growth for Sands China this year. It projects that the company's annual dividend will double to HK$1 per share starting this year, which, based on the current share price, implies a dividend yield of 5.4%. Under a progressive dividend growth policy, the annual dividend is expected to increase to over HK$1.5 per share by 2028.
Comments