Overview of results for the second quarter of '24: Net income increased 8.0% year over year and fell 2.8% month-on-month to $1.75 billion (recovering to 82% in 2019). VIP business grew 40.4% month-on-month (this business recovered to 32% in the same period in '19), and midfield business decreased 3.4% month-on-month (high-end midfield decreased 3.7% month-on-month, to 106% in the same period in '19; Volkswagen midfield fell 3.4% month-on-month to 91% in the same period in '19). Retail business: gross revenue and operating profit increased 0.9%/1.0% month-on-month respectively (recovering to 94.3%/95.4% in 2019, respectively). The hotel occupancy rate is 95%, and the average price is $201. Adjusted EBITDA decreased by 8.0% month-on-month to $0.561 billion (recovering to 73% in the same period in '19). The EBITDA rate fell 1.8 percentage points month-on-month to 32.1% (mainly affected by the Londoner Phase II renovation project and the lower recovery of visitors from mainland non-Guangdong regions (only recovering to 61% in '19)). Generally speaking, groups perform better when there is a good flow of travelers. Quarterly net profit decreased 17.2% month-on-month to $0.246 billion. Second quarter results were in line with expectations. The Group held approximately $1.79 billion in cash, and net liabilities decreased by 0.36 billion to $6.21 billion.

Performance of casinos: The Venetian Macao, The Londoner, The Parisian, Four Seasons Hotel Macau and Paragon Casino, and Sands Macao respectively recovered to 80%, 92%, 64%, 119%, and 50% in the same period in 2019; their adjusted EBITDA was US$262 million, US$103 million, US$83 million, US$100 million, and US$10 million, respectively (to 78%, 62%, 60%, 121%, 23%, respectively) in the same period of 2019.

Other highlights: The Londoner's budget for the second phase is $1.2 billion. The renovation/renovation project plans to redecorate and position the Sheraton and Conrad Hotels and Pacifica Casino; new attractions, dining, retail and entertainment products will also be added. The completion dates for the Sheraton and Conrad Hotels are expected to be completed by the end of 2024 and May 2025, respectively. It is expected that 1,300 Sheraton guest rooms and the entire Pacifica Casino will be suspended in the third quarter of this year, so the impact of the renovation project should be greater than that of the second quarter. After completion of the project, the number of rooms will be reduced from 3,968 to 2,405, but the number of suites will increase from 360 to 1,500. After completion of the second phase of The Londoner, the profitability of the Londoner in Macau is expected to increase. The Cotai Arena is also expected to relaunch at the end of the year. At that time, the Venetian EBITDA rate is expected to be higher than the current level of 38.2%. Next year, the Venetian project will also be renovated, but it will be done in the traditional way (per floor); I believe it will not have much impact on the group.

Maintaining the purchase rating, target price HK$24.25: Sands China's performance in the second quarter was in line with expectations; as the operator of Macau's largest integrated entertainment resort, the Group has a leading position in the midfield and non-gaming sectors. The Londoner Phase II renovation project may have an impact on the Group in the short term, but after completion, it will enhance the Group's competitive advantage and profit margin. We remain confident in the Group's long-term development. We maintain our buy rating and target price is HK$24.25, which corresponds to 14 times the EV/EBITDA in 2024.

Risk factors: We believe the following are some of the more important risks: macroeconomic uncertainty, increased competition due to the completion of new interbank projects, and policy risks.