Sands China reported 3Q24 net revenue of US$1.77bn (+1% QoQ, -1% YoY), and hold-normalized adjusted property Ebitda of US$587m (+4% QoQ, -5% YoY), recovering to 77% of 3Q19 level, high than our expectation, mainly thanks to the strong performance of premium mass business. We raise 24E EPS forecast from US$0.14 to US$0.15, and maintain 25E forecast of US$0.2 and 26E forecast of US$0.22. We raise target price from HK$20 to HK$25, and with 29% upside potential, we maintain Buy rating.
Resilient gaming revenue. During 3Q24, total gross gaming revenue (GGR) increased by 14% YoY, recovering to 79% of the 2019 level, which is an improvement compared to 75% and 77% recovery rates in the previous two quarters. Breaking it down by business segment, the VIP GGR rose by 11% YoY, recovering to 42% of the 2019 level, while mass GGR increased by 15%, representing a 7% growth versus 2019 level. The recovery of mass GGR is faster than the recovery of visitor numbers, with the total visitation in Macau recovering to 93%. Among them, visitation from Guangdong province increased by 6% compared to 2019, while regions in mainland China outside of Guangdong recovered 82%. The visitor volume from Hong Kong to Macau recovered to 96%, and other regions recovered to 80%.
Strong premium mass business. During 3Q24, Sands China's mass table revenue recovered 93% of 3Q19 level, with premium mass revenue surpassing 4% and base mass revenue recovering 83%. Premium mass revenue contributed 52% of total mass gaming revenue. Slot revenue surpassed 2019 level by 4%; VIP rolling chip volume recovered 34%. Hotel occupancy improved 3ppts QoQ to 98% with ADR increasing 7ppts QoQ to US$216.
Temporary renovation disruption. In late September 2024, Londoner Grand Casino debuted with 300 new Londoner Grand suites. The refurbished Venetian Arena will reopen in November. 1,200 additional Londoner Grand suites and 905 Londoner Grand rooms will come online in phases through 2Q25. The Londoner Macau's earnings results were directly impacted during the quarter but the earnings power of the completed project would meet and even exceed that of the Venetian.
Maintain Buy. We like the resilience of the gaming business. We raise target price from HK$20 to HK$25, and with 29% upside potential, we maintain Buy rating.
Risks: Lower-than-expected revenue growth.
