Posted on: August 26, 2024, 03:00h.
Last updated on: August 26, 2024, 01:04h.
Las Vegas Sands’ (NYSE: LVS) Sands China unit may restart dividend payouts next year, with no plans in place to buy out minority investors, according to an analyst. In a report following meetings with Las Vegas Sands management at the 2024 Seaport Annual Summer Conference, Seaport Research Partners analyst Vitaly Umansky stated that it’s unlikely the parent company will consider moving out Sands China minority shareholders, potentially putting the gaming stock at risk of being delisted from the Hong Kong Stock Exchange.
Last December, LVS increased its ownership of the China entity to 71.19% from 70%. Umansky suggested that while the parent company may aim to raise its stake to 75% or more, a complete buyout of minority investors is not on the horizon. Sands China currently operates five integrated resorts in Macau.
Sands China Dividend Resumption Expected Next Year
While LVS resumed its quarterly dividend payouts 13 months ago, Sands China has yet to follow suit. According to Umansky’s analysis, Sands China, along with Melco Resorts & Entertainment (NASDAQ: MLCO) and SJM Holdings, remains among the three Macau concessionaires currently not paying dividends.
Although it was initially believed that Sands China’s dividend reinstatement could take another year, Umansky’s projection of 2025 is reasonable given the ongoing recovery in Macau. As the largest operator in Macau by market share, Sands China has strong reasons to resume dividend payouts.
“Hong Kong investors like dividends, so it makes sense to restart some dividends at Sands China,” commented Umansky.
Many of the largest market participants in Hong Kong are institutions with ties to mainland China or state-owned banks, suggesting that Sands China could earn favor with Beijing by reinstating its dividend.
LVS Prioritizing Buybacks Over Dividend Growth
Since reintroducing its quarterly distribution in July 2023, Las Vegas Sands has not increased it from 20 cents a share per quarter. Umansky noted that the company, once known for steady dividend growth in the gaming industry, is now focusing on share repurchases over dividend increases.
“Las Vegas Sands will prioritize share buybacks — especially at current valuation — over dividend increases,” Umansky stated.
In Macau, Umansky forecasted that Sands China’s much-anticipated Londoner hotel might open by the end of this year, with another tower to follow in May. The Cotai Arena at Venetian Macao is expected to reopen before 2024 ends and be fully operational by the first quarter of 2025, as per the Seaport analyst.