[ET Net News Agency, 5 December 2018] UBS Global Research raised its target price for
Sands China (01928) to HK$36.57 from HK$35.75 and maintained its "neutral" rating.
The research house lowered its Macau gaming sector GGR growth assumptions from 5% to -1%
YoY for 2019, given more cautious VIP and premium mass outlooks.
However, given Sands China's large mass segment (about 70% of 2019E GGR), UBS expects
its overall business to remain relatively defensive in this current environment. Sands
China's mass exposure has allowed it to outperform the sector by about 8% over the past
three months and 11% year-to-date.
The company has increased the scope of The Londoner and Sands Cotai Central (SCC)
projects by about US$1.1bn, according to management, leading to a decline of FCF yield to
4% in 2019 by UBS's estimate.
The stock is trading at a premium valuation of 15.1x 2019 EV/EBITDA versus the sector's
12.8x 2019. As such, UBS views risk/reward as balanced at present. (KL)