Las Vegas Sands reports losses in Macao due to border restrictions

Las Vegas Sands Corp. on Wednesday warned investors that its China subsidiary operating in the Macao market suffered losses in July and August because of border restrictions imposed by the government.

In a Securities and Exchange Commission filing Wednesday, the company said, “Tighter border restrictions were implemented in Macao affecting visitation to (Sands China Ltd.’s) properties.”

The company said cash flow dipped to $44 million (U.S.) in July and a cash flow loss of $14 million in August compared with losses of $79 million and $83 million in the same periods a year earlier.

“These restrictions included travelers from Guangdong being required to submit a negative nucleic acid test certification issued within 48 hours, which tightened to 12 hours for a period, and then eased to the more relaxed seven-day requirement near the end of August,” the filing said.

“The tightening of the border restrictions in Macao is unpredictable as it is dependent on the number of new COVID-19 cases in Macao as well as mainland China and the Macao government’s response to such information.”

Analysts said the reported results were not surprising, considering the restrictions.

“These results shouldn’t come as a surprise to the most recent of our/investor expectations, which have been eroding given tighter border restrictions that were implemented in Macao throughout the summer, impairing visitation there,” said gaming industry analyst Joe Greff of New York-based J.P. Morgan.

“Admittedly, it’s tough to be near-term bullish on the Macao subsector with an expectation of an immediate positive travel mobility catalyst,” Greff said in a report to investors.

“But those investors who are patient should like the laggard profile (both in the share price and fundamental recovery). We’d be gradual buyers and like the 12-month potential,” he said. “The key issue for both Macao and Singapore is travel mobility, which is going to be directly tied to infection and vaccination rates and ensuing travel policies changes, all of which are tough to predict.”

Gaming analyst Carlo Santarelli of the New York office of Deutsche Bank added that “results are tracking well below estimates, largely due to the tighter border restrictions that were implemented in July, which have subsequently loosened somewhat at the end of August, after having a material impact on August market performance.”

Macao’s Gaming Inspection and Coordination Bureau on Sept. 1 reported monthly gross gaming revenue of $554.6 million (U.S.), the lowest monthly total yet in 2021. It was still 234 percent more than the $166.1 million collected in August 2020.

For the first eight months of 2021, Macao’s casinos have won $7.73 billion, 70.1 percent more than in the first eight months of 2020.

Sands shares, traded on the New York Stock Exchange, fell 99 cents, 2.2 percent, to close at $43.94 a share in lighter-than-average trading.

The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp., which operates six properties in Macao and one in Singapore.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.