Sands China is set to resume dividend payments for the first time in five years, with the company’s Board of Directors scheduled to meet next Friday, February 21st, to consider recommending a dividend for fiscal year 2024.
According to JP Morgan’s latest investment memo, the timing of this potential dividend payout is earlier than initially expected. ‘The timing of the potential dividend resumption… is earlier than our current model,’ the memo states.
Previously, JP Morgan had projected that the first dividend for fiscal year 2025 would be paid in the second quarter of 2025. The earlier-than-anticipated move is seen as a ‘mildly positive’ development by analysts DS Kim, Mufan Shi, and Selina Li, though expectations remain cautious.
JP Morgan’s forecast for the initial dividend payout is modest. The bank expects Sands China to declare a dividend of HK$0.25 ($0.032) per half-year, or HK$0.50 ($0.064) annually for the calendar year 2025.
‘This would imply a 3 percent yield at current levels,’ the memo notes. While this is certainly an improvement over no dividend payments, analysts caution that the payout is unlikely to have a major impact on Sands China’s stock price in the short term. ‘It’s better than nothing, but likely won’t move the needle too much,’ the memo concludes.
On the horizon, JP Morgan analysts remain optimistic that Sands China will be able to increase its dividend payouts as the company continues to reduce its debt. ‘We continue to believe the size of the dividend can ramp up each year as it continues to de-lever,’ the memo explains.
The company could eventually return to pre-COVID dividend levels of HK$1.99 ($0.26) per share annually, a figure that would imply a yield of approximately 12.5 percent at current share prices.
According to the latest financial results, Sands China posted net revenues of $1.76 billion for 4Q24, representing a 5 percent decline year-on-year.
Ongoing upgrades primarily drove this decrease at The Londoner Macao and the Venetian Arena throughout the quarter. Compared to the third quarter of 2024, revenues were also slightly lower.
Sands China’s 4Q24 net income fell 17.7 percent year-on-year to $237 million. Additionally, adjusted EBITDA for its Macau operations decreased by 12.7 percent to $571 million, impacted by a low hold on rolling play.
