Sands China plunges on weak Q1 earnings

By Beth Jinks (China Daily)
Updated: 2011-05-05 11:10
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MACAO - Sands China Ltd dropped the most in more than a month in Hong Kong trading after its Las Vegas-based parent reported first-quarter earnings that missed analysts' estimates.

The casino company slumped as much as 5.6 percent, the biggest intraday decline since March 31, to HK$21.15 ($2.72) before trading at HK$21.75 as of the 12 pm local-time trading break, leading Macao casino operators lower in Hong Kong trading. The benchmark Hang Seng Index (HSI) fell 1.3 percent.

A Macao expansion is about five weeks behind schedule because of a shortage of workers, Las Vegas Sands Corp (LVS) Chief Operating Officer Michael Leven said in a conference call on Tuesday.

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The company is in the "final stages" of negotiating with international hotel brands for two of the hotel towers being built on the Cotai site, Leven said.

"We have received proposals from both brands and hope to be able to make an announcement in the next few weeks," Sands China said in a statement on Wednesday. The first phase of the project on sites 5 and 6 of Macao's Cotai Strip may open in the first quarter of next year, it said. Sands China earlier planned an opening by the end of this year.

"The slide is an excellent buying opportunity," Aaron Fischer, a Hong Kong-based consumer and gambling analyst at CLSA Asia-Pacific Markets, said in an interview on Wednesday.

The delay of the Cotai Strip project "should not come as a major surprise," said Fischer, who recommends buying Sands China's stock.

Sheldon Adelson, chairman and chief executive officer of Sands China's parent, has said he plans to re-create the Las Vegas Strip on a 1.8-mile length of reclaimed land connecting two offshore islands in Macao. He built the Venetian Macao, the world's biggest casino by floor area, on the former Portuguese colony's Cotai Strip, and competitors have followed.

Adelson's Las Vegas Sands on Tuesday said first quarter net income climbed to $289.3 million from $17.6 million.

Las Vegas Sands' Macao cash flow gained 46 percent to $378.6 million.

Macao's casino revenue grew 45 percent to 20.5 billion patacas ($2.6 billion) in April, which CLSA's Fischer said was "above expectations." Revenue in the first few days of May have been exceptionally strong and in the words of one operator, "bordering on being irrational" .

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