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4-Traders Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  SANDS CHINA LTD.    1928   KYG7800X1079

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Sands opens Macau casino, eyes $35 billion Spain complex

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04/11/2012 | 03:31pm CET

U.S. billionaire Sheldon Adelson said he plans to spend $35 billion on a mini-Las Vegas strip in Spain, where he is courting the country's two top urban areas, Barcelona and Madrid, with plans for a casino complex.

Adelson, chairman and CEO of Las Vegas Sands Corp, later presided over the opening of his new casino property in the former Portuguese colony of Macau, the world's largest casino destination, where he is expected to increase market share considerably over the next 12 months.

"We are looking at 12 integrated resorts, 3,000 rooms each. A mini Las Vegas, about half the size of the Las Vegas strip in Spain for the European market," said Adelson, clad in a dark suit and sporting a matching red chequered tie and handkerchief, speaking on Wednesday ahead of the Macau opening.

Each building would cost between $2.5 billion and $3 billion and target customers from western and eastern Europe.

Adelson did not address the debt crisis that has gripped Europe, although he has said the Spanish complex would be a five to 10-year project, by which time he expected demand to have picked up significantly.

Some analysts still see the success of the Spanish venture as dependent on tax breaks which Adelson is reported to be seeking.

"While we typically favor investments in Asia given the ultra-high appetite to gamble, we would be positive on investments in places like Spain provided the government subsidized the investment through a low gaming tax," said Aaron Fischer, head of consumer and gaming at CLSA Asia Pacific Markets in Hong Kong.

"The post-tax operating margin would then be high enough to support the high upfront capital investment resulting in a reasonable return on invested capital," Fischer said.

Las Vegas Sands in February said it was planning an investment of 15 billion euros ($20 billion) for a Spanish casino complex that would include 36,000 hotel beds, 18,000 slot machines and three golf courses.


Adelson said he would continue to develop resorts in Asia after the success of his properties in Macau and Singapore, where his casino is among the most profitable in the world.

"We are looking to build two each in Japan, Korea and Vietnam. Taiwan is late in catching up. There is pending legislation in the other three countries," said Adelson, one of the world's richest men and worth an estimated $25 billion, according to Forbes.

Under its $31 billion Macau unit Sands China Ltd, the group already has two casinos in the special administrative region of China just one hour by ferry from Hong Kong.

Adelson, characterized by his red hair and outspoken comments, is seen by many in the industry as one of the major catalysts that helped transform Macau's seedy gambling dens into a broader casino resort destination.

He took a big gamble to build his gargantuan Venetian property, the world's sixth-largest building in the world by area, when the Cotai land strip was still a marshy swamp.

Sands officially opened its new property on Wednesday in a ceremony that included lion dancing and tightrope walkers suspended from the tops of its two colossal casino structures.

The new Sands Cotai Central will cost $5 billion on completion, slightly less than the company's $6 billion Marina Bay Sands resort in Singapore. "The total cost up till now is $4.4 billion, but who is counting?" Adelson said, laughing.

It is twice the cost of local player Galaxy Entertainment Group Ltd's Galaxy Macau, which opened last year.

The Himalayan- and Polynesian-themed project will add 5,800 hotel rooms to Macau's supply-constrained market, as well as 300,000 square feet of gaming space and 1.2 million square feet of shopping, entertainment, dining and convention facilities.

Estimated to increase Macau's total hotel capacity by 26 percent, it has opened the Conrad and Holiday Inn hotel brands and will open a Sheraton hotel in the second half.

The Holiday Inn and Conrad hotels are located side by side separated via a skylit shopping arcade. The interior has been designed as an indoor rainforest, with escalators surrounded by parrot green leafy palms and cascading waterfalls.


The opening of Sands Cotai Central comes after lengthy delays in construction in 2008 when the financial crisis hit and the company laid off hundreds of workers.

Adelson, 78, said the delay was not just due to financing, but also a shortage of labor and issues over the number of gaming tables.

As the only operator to open a new casino resort in Macau this year, analysts say Sands China is likely to increase its approximately 16 percent share of Macau's gaming market to 25 percent within the next year.

"We are submitting plans for another 3,600-room property next to Four Seasons. We hope to move some dirt around ... put in pillage before the end of this year," Adelson said, referring to Parcel 3, a plot of land already allocated to the group.

It would take between 24 and 44 months to build.

His application for land sites 7 and 8, where he had planned to build more gaming properties on Macau's Cotai strip, was rejected by the Macau government in 2010 after the group had invested around $160 million on the site. He said he was in talks with the government about potential modifications the company would have to go through.

It has been far from a smooth journey in Macau for Adelson, who was born into a Jewish immigrant family in Boston and started work by selling newspapers on street corners.

He is embroiled in a number of lawsuits, including one with Steve Jacobs, ex-head of Sands' Macau operations, who is suing for breach of contract and is working with the U.S. government on corruption investigations involving Sands China.

Shares in Sands China were down 3 percent, lagging a 1.2 percent drop in the main Hong Kong index.

Macau, the only place where Chinese nationals are legally allowed to gamble in casinos, said gambling revenue surged 24.4 percent in March to 25 billion patacas ($3.1 billion), in line with forecasts.

(Editing by Anne Marie Roantree and David Holmes)

By Farah Master

Stocks treated in this article : Sands China Ltd, Las Vegas Sands Corp.
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Financials ($)
Sales 2017 7 609 M
EBIT 2017 1 698 M
Net income 2017 1 547 M
Debt 2017 3 817 M
Yield 2017 5,64%
P/E ratio 2017 23,46
P/E ratio 2018 21,12
EV / Sales 2017 5,29x
EV / Sales 2018 5,01x
Capitalization 36 425 M
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SANDS CHINA LTD. Technical Analysis Chart | 1928 | KYG7800X1079 | 4-Traders
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Number of Analysts 24
Average target price 4,83 $
Spread / Average Target 7,0%
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Sheldon Gary Adelson Chairman & Chief Executive Officer
Ying Wai Wong President, COO & Executive Director
Yun Chiang Independent Non-Executive Director
Victor Patrick Hoog Antink Independent Non-Executive Director
Charles Daniel Forman Non-Executive Director
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