CICC: Maintains Sands China (01928) "Outperform" rating, target price HK$13.50

CICC released a research report maintaining Sands China (01928) "Outperform" rating, target price HK$13.50, corresponding to 9x EV/EBITDA in 2026, implying 19% upside from the current share price. The company's adjusted property EBITDA for the third quarter of 2026 was US$529 million, in line with the Visible Alpha consensus of US$538 million and the firm's forecast of US$528 million. The firm believes the company's results were mainly driven by an increase in total gaming revenue market share and a return of win rate to normal levels. CICC maintains its EBITDA forecasts for the company in 2026 and 2027. CICC's main views are as follows: Third quarter 2026 results in line with Visible Alpha consensus Sands China reported third quarter 2026 results: net revenue of US$1.940 billion, up 2% year-on-year and up 8% quarter-on-quarter, recovering to 92% of the third quarter 2019 level; adjusted property EBITDA of US$529 million, down 12% year-on-year and up 23% quarter-on-quarter, recovering to 70% of the third quarter 2019 level, in line with the Visible Alpha consensus of US$538 million and the firm's forecast of US$528 million. The firm believes Sands China's results were mainly driven by an increase in total gaming revenue market share and a return of win rate to normal levels. VIP and premium mass segments expected to remain under pressure CICC expects that, affected by Middle East regional conflicts, stricter cross-border tax reviews and capital market volatility, high-net-worth customers may reduce visit frequency, and the VIP and premium mass segments may remain under pressure. During the third quarter of 2026 and the National Day Golden Week, per-capita spending by premium customers declined, and the firm expects the premium segment to weaken further in the near to medium term. Fixed operating costs expected to be flat quarter-on-quarter in 2027 The firm expects fixed operating costs to be flat quarter-on-quarter in 2027 (excluding the factor of rising basic living costs), thanks to the company pausing staff recruitment during the period of slowing gaming revenue. Management is committed to increasing the company's market share while maintaining a prudent reinvestment rate; competitors have not yet significantly increased reinvestment in players, and the marketing rebate environment has eased. Earnings forecasts and valuation CICC maintains its EBITDA forecasts for 2026 and 2027. The company's current share price corresponds to 8x EV/EBITDA in 2026. The firm maintains its "Outperform" rating, with a target price of HK$13.50, corresponding to 9x EV/EBITDA in 2026, implying 19% upside from the current share price. Risk factors Slower-than-expected recovery; disruption from construction projects; intensified competition may lead to market share loss.