Posted on: August 26, 2024, 03:00h.
Last updated on: August 26, 2024, 01:04h.
Las Vegas Sands’ (NYSE: LVS) Sands China unit could resume dividends next year and the casino operator is unlikely to buy out minority investors.
That’s the view of Seaport Research Partners analyst Vitaly Umansky. In a new report to clients following meetings with Las Vegas Sands management at the 2024 Seaport Annual Summer Conference, the analyst said it’s not likely the parent company will consider moving out Sands China minority shareholders, which would result in delisting of the gaming stock from the Hong Kong Stock Exchange.
There is not a likely scenario at this stage of a full buyout of the Sands China minority, and delisting of Sands China,” observed Umansky. “A listing in Hong Kong continues to show Sands’ commitment in China.”
Last December, LVS boosted its ownership of the China entity to 71.19% from 70%. Umansky said it’s possible the Las Vegas-based parent would like to increase that stake to 75% or more, but moving out minority investors entirely isn’t in the offing. Sands China operates five integrated resorts in Macau.
Sands China Dividend Could Return Next Year
It’s been 13 months since LVS resumed its quarterly payout, but Sands China remains one of three Macau concessionaires currently not paying a dividend. Melco Resorts & Entertainment (NASDAQ: MLCO) and SJM Holdings are the other.
Entering this year, it was widely believed that it could take another year for Sands China to restore its dividend, so Umansky’s forecast of 2025 isn’t a negative surprise. The ongoing recovery in Macau, where Sands China is the largest operator by market share, could be supportive of dividend resumption. The gaming company has compelling reasons to renew payouts.
“Hong Kong investors like dividends, so it makes sense to restart some dividends at Sands China,” added Umansky.
Many of the largest market participants in Hong Kong are institutions with ties to mainland China or state-owned banks. The implication there is that Sands China could potentially garner some favor with Beijing by bringing back its dividend.
LVS Likely to Focus on Buybacks Over Dividend
Since announcing the return of its quarterly distribution in July 2023, Las Vegas Sands has not increased it from 20 cents a share per quarter. Prior to the coronavirus pandemic, the company was one of the steadiest growers of its dividend in the gaming industry, but Umansky said the operator’s current emphasis will be share repurchases over dividend growth.
“Las Vegas Sands will prioritize share buybacks — especially at current valuation — over dividend increases,” noted the analyst.
In terms of goings on in Macau, Umansky said it’s likely part of Sands China’s much ballyhooed Londoner hotel will open before the end of this year with another tower to follow next May. The Cotai Arena at Venetian Macao will reopen before the end of 2024 and be fully operational by the end of the first quarter of 2025, according to the Seaport analyst.
