GO
Loading...

Sands China CEO: Anti-graft drive doesn't worry us

Following blow-out first-half earnings, the CEO of Macau's largest resorts and casino operator, Sands China, told CNBC he expects smooth sailing this year and brushed off concerns about any negative impacts from the government's anti-graft campaign.

After years of exponential growth, Macau - the world's largest gambling destination - has fallen on tougher times recently.

As China's government continues its crackdown on corruption, VIP numbers and junket (VIP room promoters) liquidity have taken a hit, while the distraction of the World Cup soccer tournament, changes to tourist visas and general visitor fatigue dampened appetite from the mass market segment.

Read MoreTime to cash in your bets on Macau?

But Ed Tracy, CEO of Sands China, told CNBC Asia's "Squawk Box" on Monday he's not concerned.

"The corruption clampdown in China is very real and it's articulated itself in the VIP segment... But we are not VIP centric we are mass market centric - so we'll be impacted the least [compared to other Macau players]," he said.

"We feel very comfortable with our long-term and short-term strategy - it's a steady hand on the wheel now," he added.

Read MoreTake the gamble on these gaming stocks: Pimco's Kiesel

Sands China posted record breaking earnings for the first six months of the year, after its 'earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 35.7 percent on-year to $1.74 billion, driven by gains in the mass market and mass premium market. Revenue rose 24.7 percent to $5.08 billion, while net profit jumped 45.7 percent to $1.37 billion.

But the robust earnings weren't enough to encourage investors, as shares of Sands China weakened by 0.5 percent on Monday. Shares are down 14 percent since early July, amid ongoing concern about the headwinds facing the sector.

This picture taken on September 19, 2012 shows a Sands casino employees during training in Macau.
Philippe Lopez | AFP | Getty Images
This picture taken on September 19, 2012 shows a Sands casino employees during training in Macau.

The latest data show revenue growth in the mass market segment slowed to a 16 percent gain on year in July, compared to June's 24 percent rise, while revenue growth in the VIP sector - which accounts for over 70 percent of Macau revenue - was 13 percent on-year in July, slower than 17 percent in June.

Read MoreMacau casino workers want bigger share of the pie

These declines led investment bank Morgan Stanley to downgrade Sands China from its best-ideas list earlier this month, citing a high base in the second half of last year, depressed investor sentiment and the firm's decreasing market share.

Tracy said the main reason for July's weakening mass market numbers was the impact from the World Cup, which detracted gamblers away from the casinos.

"If you read the China Sports Lottery numbers, which appeared to be in excess of $161 billion wagered, I don't think there's any big surprise that there was somewhat a leveling off in this phenomenal growth we've experienced over the last three years," he said.

Read MoreWith casinos struggling, some advocate sports gambling

Sands also received some criticism over delays to the construction of its new Parisian project. The CEO said the project is on track to be completed in the first quarter of 2016, a revision from their earlier target date of the fourth quarter of 2015.

The CEO also played down the impacts of other headwinds for the company including the soon-to-be-implemented full smoking ban and rising labor costs.

"I don't think the primary market -which comes from mainland China - come to Macau to smoke. I think they come to Macau to shop, have dining experiences, see the boxing and concert events and gamble," he added.

Contact Business

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More