et income for the China unit of Las Vegas Sands rose to us$ 326.7 million from us$ 278.3 million a year ago, according to a statement from the parent company. Net revenue jumped 37 percent to us$ 1.64 billion as the Macau operator benefited from its newest resort Sands Cotai Central that opened in April.
“Earnings growth came from the ramp-up of Sands Cotai Central and Venetian winning back mass market share,” Karen Tang, a Hong Kong-based analyst at Deutsche Bank, wrote in a research note to clients. Sands China’s market share will probably expand to 23 percent by 2014, from 19 percent in the third quarter this year, she said.
Sands China has joined rivals such as Galaxy Entertainment Group in expanding on Macau’s increasingly popular Cotai strip to reach more middle-class Chinese tourists in the world’s largest gambling hub. Macau casino revenue rose 3.2 percent to reach a record last month, as promotions over the eight-day Golden Week holiday attracted tourists.
Sands China rose 6.3 percent at the close in Hong Kong trading, the most since January 26. The stock has surged 45 percent this year, compared with a 20 percent advance for the benchmark Hang Seng Index. Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, increased 24 percent to us$ 485.6 million.
Middle-class Chinese tourists, who make up the bulk of Macau’s so-called mass market, have helped shore up growth even as high-stake bettors have cut back in a weaker economy. “Rolling chip volume,” a measure of activity in the casino’s VIP rooms, dropped 12 percent from the previous year during the quarter, even as mass-market volume gained 6.2 percent, Sands said.
One reason rolling-chip volume declined was because of renovations at the casino’s Paiza Club, which reduced the number of active tables in the category by an average of 23 during the quarter, the company said. Sands China and rivals such as Wynn Macau are ramping up expansion. Sands plans to invest at least us$ 2.5 billion to build its fifth resort, to be called The Parisian, in Macau. The Parisian will have a replica of the Eiffel Tower and family-oriented facilities to attract middle-class gamblers from China, who provide wider margins.
Wynn Macau, whose parent Wynn Resorts announced a special dividend last week, won a land grant from Macau’s government in May to build its second casino in the former Portuguese colony. MGM China Holdings and SJM Holdings were also given the approval last month to develop casinos in Cotai.