VIP business not expected to rebound next year says Sands

Thursday 5th of November 2015

Sands China’s management believes the VIP business is structurally challenging and does not expect a strong rebound next year, Citi Research said following an investor conference.

Citi said based on meetings at the Citi China Investor Conference on November 4, the junket business will continue to consolidate and there will be more small junkets closing down.

Since Sands China has 50 percent of its VIP business coming from direct VIP, the VIP junket business represents about 5 percent of its overall EBITDA.

Sands China will continue to shift tables from VIP to mass, given the demand in mass business remains resilient, while Sands believes the decline in premium mass business is beginning to stabilize, said Citi.

Sands management believes the opening of new properties will bring more visitors to Macau in the next few years. The new openings will attract more visitors to Cotai, which should benefit Venetian and Cotai Central. St Regis is on track to open on December 17 . Parisian is on track and on budget to open in late 2016.

“Management is confident that all operators will obtain 250 tables for their respective Cotai projects. They believe the key to drive visitation is not gaming tables, but the retail and non-gaming entertainment. Parisian will feature 3,000 hotel rooms that focus on grind mass customers. In the meantime, Sands China will put in ~US$125m to refurbish the Venetian,” said Citi.