Sands China Could Restart Dividend in 2025, Unlikely to Buy Out Minority Investors

Posted on: August 26, 2024, 03:00h. 

Last updated on: August 26, 2024, 10:11h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Las Vegas Sands’ (NYSE: LVS) Sands China unit could resume dividends next year and the casino operator is unlikely to buy out minority investors.

Las Vegas Sands
The Venetian Macau. Operator Sands China could restart its dividend next year, according to an analyst. (Image: Bobby Yip/Reuters)

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, Umansky said it’s not likely LVS 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, and Sands China remains one of three Macau concessionaires currently not paying a dividend. Melco Resorts & Entertainment (NASDAQ: MLCO) and SJM Holdings are the others.

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 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 hasn’t increased it from 20 cents a share per quarter. Before 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,” he noted.

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.