Sands China's Stock to Jump 40% on Mass Market Appeal: Analyst

Sands China, a subsidiary of gaming giant Las Vegas Sands, may be ranked fourth in Macau’s overall gaming revenues, but according to a report by Macquarie Securities Research, its casinos have “mass market” appeal, which will boost the company’s stock in the coming months.

The Venetian Resort and Casino Asia. China. Macau. The Venetian Casino and Resort.
Angelo Cavalli | Getty Images

Macquarie has raised its 12-month price target on Sands China’s stock to HK$30.30 — implying a near 40 percent upside from its current trading price of Hk$21.80 — and reiterated its outperform rating on the firm.

The report cited a recent survey conducted by the bank, which found 42 percent of 2,000 respondents choosing Sands’ The Venetian as their “preferred” casino. Trailing at a distant second was Galaxy Entertainment's Grand Lisboa casino, with just 15 percent of votes.

"The Venetian has the strongest brand in Macau and is the preferred casino to visit," Macquarie stated in a report. "It showed that The Venetian attracts players with better demographics relative to its peers, namely a younger 'white collar' crowd with a higher gaming and non-gaming budget."

Macquarie believes the market has yet to price in “the strength of Venetian’s brand” and the prospects of a potential stock gain once the global markets stabilize from the recent sell-off. Sands China’s fortunes are also set to get a boost when its third casino, the so-called Site 5 in the Cotai Strip, opens next year.

"We had been conservative on the opening of Site 5 and were expecting opening in late fourth quarter of 2012...we think the company's scheduled opening in mid if 2012 is feasible."

Macquarie attributes Sands China's mass-market appeal to its aggressive advertising in the non-gaming function, as well as its recent efforts in building relationships with travel agents in mainland China that would help bring visitors in.

Sands China has three operating casinos in Macau - The Venetian, the Sands Macao and the Plaza Macao - and three upcoming projects in the Cotai Strip. Its competes with SJM Macau , Galaxy Entertainment, Melco Crown, Wynn Resorts and MGM Macau.