Deutsche Bank cut its target price for Sands China (01928) to HK$40 from HK$43.5, and downgraded its rating to "hold" from "buy" given a weaker outlook on market share trends.
The research house believes Sands has the most fundamentally stable business model in Macau with high exposure to mass gaming and non-gaming. However, DB expects that Sands China will lose market share in 2017-20 as mass market growth is slowing due to lower quality mass players and decelerating China credit growth.
It said that Sands is now trading on rich valuation of 16.3x EV/EBITDA compared to industry 14.7x. This valuation looks rich given only 3% EBITDA CAGR in 2016-19, lagging behind industry average of 9% CAGR.