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China – Sands’ US$61bn spend in Macau and 25,000 employees keeps it in pole position

By - 26 October 2022

Morgan Stanley has cast its eye over the Macau casino licence renewal process, stating that Sands China is at least risk of losing its licence having invested the most money, being the biggest employer in the Macau casino sector and generating the largest percentage of non-gaming revenue.

Analysts Praveen Choudhary and Gareth Leung highlighted that Sands has spent US$61bn in the SAR since 2007 and currently employs 25,110 people equating to 26 per cent of the industry.

Its percentage of revenue from non-gaming is 27 per cent.

The analysts say this ‘should see its license renewed.’

“Among large caps, Sands has a more attractive valuation than Galaxy,” they wrote. “Galaxy outperformed Sands during the pandemic, which we think was due to better balance sheet and lower credit risk. Once Sands’ gaming license is renewed and the industry starts making positive cash flow, we expect Sands to reverse this performance.”

“We continue to assume 2024 is the year the industry fully normalizes and keep our 2024e industry GGR unchanged at 80 per cent of 2019 level,” they added.

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