Top Biz News

Sands China caught in Dubai turbulence

(China Daily)
Updated: 2009-12-01 08:02

Sands China Ltd, controlled by billionaire Sheldon Adelson, tumbled as much as 15 percent on its first day of trading in Hong Kong after Dubai World's possible default hurt investor confidence.

Las Vegas Sands Corp's Macao unit, operator of the world's biggest casino by floor area, closed down 10.9 percent to HK$9.25 ($1.19), after earlier falling as low as HK$8.78. Sands China raised HK$19.4 billion in the city's biggest initial public offering this year.

The company and parent Las Vegas Sands sold a 23.2 percent stake in its Macao business to repay loans and resume construction of a 13.3 million sq foot casino-resort in the world's biggest gambling hub.

While Sands China's fundraising makes its plan to recreate the Las Vegas Strip in the Chinese city viable, news of a possible default by Dubai World contributed to "some negative sentiment" toward tourism-related companies, independent strategist Jonathan Galaviz said.

"Half of Dubai's story is tourism," Galaviz said. "There will probably be some negative sentiment toward tourism assets globally, such as casino operations, as Dubai gets squared away."

Wynn, SJM

Other casino operators rose yesterday as investors took advantage of Friday's declines, Steven Leung, director of institutional sales at UOB Kay-Hian Ltd, said.

Wynn Macao Ltd, the unit of billionaire Stephen Wynn's casino company, surged 3.57 percent to HK$9.57. SJM Holdings Ltd, billionaire Stanley Ho's holding company and the biggest casino operator in Macao by market share, climbed 4.7 percent to HK$3.99.

Investors are having difficulty deriving valuation for Macao casino stocks, said John Koh, regional investment director at MEAG Hong Kong Ltd.

"For all the casinos, most of the pricing is based on expectations," said Koh. "There's not a lot of solid earnings or track record to justify what are the real price-to-earnings, price-to-book multiples."

Sands China and its parent had sold 1.87 billion shares for HK$10.38 each, at the bottom of a price range, initially valuing the company at HK$83.5 billion, according to Bloomberg calculations. Yesterday's decline cut its market value to about HK$72 billion.

"Why would I be disappointed?" Adelson said when asked after the shares opened lower. "We are not in business for 10 minutes, we are in for decades."

Sands China is at least the seventh newly listed stock to decline on its first day of trading in Hong Kong since September.

"While the market reception is sub-optimal, it doesn't correlate to what they've accomplished," Galaviz said. "They've raised the capital needed for the company to be viable for the next few years as they help push Macao to the next level of tourism, with visitors coming also for shopping and entertainment."