Sands China, the Macau casino operations owned by Las Vegas Sands (LVS) kicked off the roadshow for its Hong Kong initial public offering

Sands Hotel - Macau Sep 2009

November 10, 2009 - Bankers argue that Sands China could be the ticket. The casino operator, which is owned by Las Vegas gaming magnate Sheldon Adelson and holds one of six casino licences in Macau, already controls about 30% of the mass market and is raising money that will go partly towards the re-starting of a development project on the Cotai Strip that was halted last year as the parent company was running out of cash. According to syndicate analysts, the company is also in a prime position to capitalise on any growth in retail spending by Chinese visitors to Macau as it operates about 74% of all grade-A retail space available in the former Portuguese colony.

"Retail spending in Macau has been growing at a compound annual growth rate of 17% since 2004, and Sands China's retail positioning has essentially provided it with a call option on any growth in PRC visitor discretionary spend," analysts at one syndicate bank said, adding that they currently ascribe very little value to the company's retail franchises as Macau's retail market is still at a nascent stage.

However, the retail assets are part of what makes Sands China different from Wynn Macau, which listed in Hong Kong last month. Essentially, Sands China has a much more diversified revenue strategy that, alongside the gambling, also puts a lot of weight on conventions, entertainment and hospitality. One analyst report dubs the company as a pioneer in developing the integrated resorts business model. Its focus on the mass market, which has higher profit margins than the VIP segment, also sets it apart from Wynn, which is primarily targeting high-rollers and VIPs.

The interest in the stock was evident as investors, including a couple of local tycoons, crowded into Sands China's luncheon meeting in Hong Kong yesterday. During the roadshow, the management will also visit Singapore, Europe and the US, including a gaming conference in Las Vegas, where it will get a chance to meet with specialist US investors. FULL STORY