J.P. Morgan: Maintains Sands China (01928) "Overweight" rating and HK$17.5 target price; weak third-quarter results in line with expectations

J.P. Morgan released a research report stating that Sands China's (01928) third-quarter results were weak, broadly in line with market concerns. The bank currently holds a selective and cautious view on Macau gaming stocks, maintaining Sands China's "Overweight" rating and a target price of HK$17.5, believing that progressive dividend payments, a strong balance sheet, and still-solid free cash flow can support the risk-reward profile over the next 6 to 12 months. Sands China's third-quarter EBITDA adjusted for luck factor was US$518 million, down 14% year-on-year and flat quarter-on-quarter, mainly due to a low base in the previous quarter. The figure was 2% below the sell-side consensus of US$527 million, but not too bad relative to buy-side forecasts that had recently been cut to below US$500 million. The bank noted that industry performance was lackluster, with sentiment among Chinese premium consumers and gamblers still weak, which was disappointing. The bank expects other gaming operators to face similar pressure and estimates that industry third-quarter EBITDA fell about 10% year-on-year, leaving ongoing downside risk to market forecasts for second-half and full-year 2027 EBITDA.