Citigroup: Lowered target price of Sands China (01928) to HK$23. Last quarter's property EBITDA was lower than market expectations.

According to a report released by Citigroup, it is expected that higher operating expenses will reappear in the next four years (2026-2029) at Sands China (01928), but still confident that Sands China's EBITDA profit margin can reach the lower end of the low 30% range. It reiterated its "buy" rating on the company but lowered its target price from HK$24.25 to HK$23, valuing it in a comprehensive manner. Sands China announced that its fourth-quarter performance last year was roughly in line with the bank's expectations, with net revenue increasing by 16% year-on-year to US$2.058 billion (up 8% quarterly) and property EBITDA increasing by 6% year-on-year to US$608 million (up 1% quarterly), roughly in line with the bank's original forecast of US$616 million, but 3% lower than the market consensus of US$628 million. Adjusting for lucky factors, the property EBITDA for the quarter will be US$582 million. The adjusted EBITDA profit margin decreased by about 3.9 percentage points year-on-year to approximately 28.9%. The bank cited Sands China management in an analysis conference call, stating that the company incurred significant expenses due to events (the bank believes that the NBA China games and the 15th National Games accounted for most of them), leading to a 2.7 percentage point year-on-year decrease in the EBITDA profit margin (29.5% in the fourth quarter of 2025; 32.2% in the fourth quarter of 2024). Considering the above activities and the less than ideal VIP/Mass market revenue mix in the quarter, the bank believes that the reported EBITDA profit margin shows that Sands China is still doing well in controlling operating expenses. Citigroup cited Sands China management in an analysis conference call, stating that the mid-field win rate decreased by about 140 basis points year-on-year, marketing efforts have stabilized, and further optimization will be sought in 2026.