Macquarie has revised its investment rating on Sands China (01928) from "Outperform" to "Neutral" and lowered its valuation basis. The valuation metric was reduced from 12 times the forecasted enterprise value multiple for this year to 10 times, leading to a corresponding 21% cut in the target price to HK$16.7. The firm explained that after removing the valuation premium, Sands China's valuation is now in line with its peers, such as Wynn Macau and MGM China, reflecting an expected slowdown in growth to mid-single digits. The report noted that the company distributed dividends equivalent to 67% of its net profit last year, representing a dividend yield of 4.5%. Management indicated during the recent earnings call that they plan to seek approval for a dividend increase, which could serve as a potential catalyst for share price appreciation. For the first quarter of fiscal 2026, Sands China reported adjusted property EBITDA of $633 million, up 18.3% year-on-year and 4% quarter-on-quarter, exceeding the firm's expectations. During the period, the mass-market share reached 25.7%, the highest since the first quarter of 2024. Analysis suggests this was primarily driven by the company's capacity advantages, making it a major beneficiary during the Spring Festival period. Macquarie slightly lowered its adjusted EBITDA forecasts for fiscal years 2026 to 2028 by less than 1%, reflecting more cautious assumptions about 2026 profit margins. This downward revision was partially offset by the better-than-expected performance in the first quarter of 2026.
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