Goldman Sachs has released a research report stating it has reduced its EBITDA forecast for Sands China Ltd (01928) by 7% for this year, with minor adjustments for the following two years.

The firm maintains a "Buy" rating on Sands China Ltd, with the target price trimmed from HK$20.8 to HK$19.5, based on 12 times the 2026 estimated enterprise value to EBITDA. The bank believes the current share price represents 8.8 times the adjusted EBITDA for the second quarter of this year, offering a 7.6% dividend yield, which is an attractive valuation.

Sands China Ltd reported its second-quarter results, with adjusted property EBITDA reaching US$430 million, significantly below the firm's and market expectations. This was primarily due to an unusually low VIP win rate (1.35%, compared to 3.58% in the first quarter and a theoretical 3.3%) and a below-normal mass market win rate (20.4%, compared to 21.4% in the first quarter). Excluding the win rate factor, adjusted EBITDA was approximately US$517 million, down 16% quarter-on-quarter and 8% year-on-year, still impacted by gaming spending diversion during the World Cup and weaker regional tourism trends.

Goldman Sachs noted that Sands China Ltd's overall gaming revenue market share fell 2.2 percentage points quarter-on-quarter to 24% in the second quarter. Specifically, VIP rolling chip volume market share dropped 3.5 percentage points sequentially to 21.4%, while mass market and slot machine market share edged up 0.4 percentage points to 26.3%.

Management acknowledged the second-quarter performance was disappointing and stated that the negative win rate impact in the quarter reached US$87 million, a historical high, but they see no structural reasons for the persistently low win rate.

The bank expects Sands China Ltd's gaming revenue market share to rebound to 25%, with daily operating expenses stabilizing at US$6.7 million. It forecasts property EBITDA for the third and fourth quarters to recover to US$554 million and US$597 million, respectively.