Asia tech stocks slide tracking Wall St losses amid AI doubts, govt. uncertainty
On Thursday, Citi reiterated its Buy rating on Sands China Ltd . (HK:1928:HK) (OTC: SCHYY) with a steady price target of HK$21.00. Despite maintaining a positive outlook on the company, Citi has initiated a 30-day Downside Catalyst Watch, indicating potential near-term risks for the stock. According to InvestingPro data, the stock appears undervalued, trading at a P/E ratio of 13.3x, despite impressive gross profit margins of 80.2%.
Sands China (OTC:SCHYY)'s estimated property EBITDA for the first quarter of 2025 is projected to decline to $530 million, which marks a 13% decrease year-over-year and a 7% drop quarter-over-quarter. This estimate is considered the lowest among analysts and could lead to investor disappointment if realized. The anticipated decline in property EBITDA is attributed to several factors, including the absence of turnover rent, which is estimated to have an EBITDA impact of -$15 million, increased operational expenses of approximately $30 million at the Londoner following the opening of more hotel suites before the Chinese New Year, and an unfavorable hold that could affect EBITDA by around -$20 million. InvestingPro analysis shows the company generated $2.11B in EBITDA over the last twelve months, with a solid financial health score rated as "GOOD."
Despite these concerns, Sands China's market share is expected to have remained stable quarter-over-quarter at 23% for the first quarter of 2025. Citi's Downside Catalyst Watch suggests vigilance over the next 30 days as these projections could influence the stock's performance.
Citi's stance on Sands China remains optimistic in the longer term, with expectations that the company will emerge as a strong competitor in the Premium Mass segment after the full opening of the Londoner Grand. This outlook supports the firm's decision to uphold its Buy rating on the stock, reflecting confidence in the company's future growth potential despite the short-term headwinds.
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