股

票

研 [Table_Title] Noah Hudson Company Report: Sands China (01928 HK) 究 (86755) 2397 6684 EquityResearch 公司报告： 金沙中国 (01928 HK) [email protected]

10 November 2020 [Table_Summary] Expect Positive EBITDA in 4Q2020 预期2020年第4季度实现EBITDA转正

 Sands China's 3Q2020 hold-normalized adjusted property EBITDA loss Rating:[Table_Rank ] Reduce 公 was US$240 mn. 3Q2020 total revenue decreased by 92.1% yoy to US$167 Upgraded 司 mn and was 40.1% below our forecast. Due to social distancing measures and travel restrictions as a result of the COVID-19 pandemic, Sands China's 评级： 减持 (上调)

报 properties operated at reduced capacity, with some operations closed. 告  We have increased our 2020-2022 revenue forecasts by 8.0%, 23.8% and 6[Table_Price-18m TP 目标价] : HK$28.70

Company Report Company 9.1%, respectively. Our updated forecast reflects 2020 to 2022 total revenue Revised from 原目标价: HK$28.00 of US$1.8 bn, US$5.5 bn and US$7.3 bn, representing YoY growth of -79.7%, 209.8% and 31.3%, respectively. With the COVID-19 pandemic Share price 股价: HK$30.500

under control in mainland China, we expect continued steady recovery of Macau GGR in 4Q2020 and going into 2021. Stock performance  We have increased our 2020-2022 adjusted property EBITDA forecasts 股价表现 by 0.9%, 6.3% and 2.2%, respectively. We forecast 2020 to 2022 adjusted [Table_QuotePic40 % change ] property EBITDA of -US$309 mn, US$1.5 bn and US$2.4 bn, respectively. 30 After recording adjusted property EBITDA losses in 2Q2020 and 3Q2020, we

expect the Company to achieve adjusted property EBITDA profit starting from 20

证 4Q2020 and that EBITDA margin will steadily increase through 2021. We 10 forecast 2020-2022 shareholders' net profit of -US$1.7 bn, US$470 mn and 0 券 US$1.4 bn, respectively.

告 (10)

研  We increase our target price from HK$28.00 to HK$28.70 and upgrade

报 (20)

from "Sell" to "Reduce" investment rating. Our new target price is 究 (30)

究 equivalent to 23.6x and 14.1x 2021 and 2022 EV/ adjusted EBITDA and is a

报 (40)

20.3% discount to our DCF derived NAV per share of HK$35.99. Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 研

告

 金沙中国 2020 年第 3 季度标准化赢率下经调整物业 EBITDA 亏损为 2.4 亿美元。2020 HSI Index SANDS CHINA LTD

券 EquityResearch Report 年第 3 季度总收入同比下降 92.1%至 1.67 亿美元，低于我们的预测 40.1%。由于新冠肺

[Ta 证 炎疫情带来的社交距离措施和旅行限制，金沙中国物业运营水平下降，而部分业务关闭。 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 股价变动 1 个月 3 个月 1 年

ble_  我们分别上调 2020 至 2022 年收入预测 8.0%、23.8%和 9.1%。我们最新的 2020 至 2022 Abs. %

7.6 3.4 (24.9) Info 年总收入预测为 18 亿美元、55 亿美元和 73 亿美元，分别对应-79.7%、209.8%和 31.3% 绝对变动 % 的同比增长。随着新冠肺炎疫情在中国大陆得到控制，我们预计 第 季度澳门博彩 Rel. % to HS Index 2020 4 (0.3) (2.7) (19.0) 相对恒指变动 %

1] 总收入会继续稳健恢复，并持续至 2021 年。 Avg. Share price(HK$) 28.3 31.1 33.6 博 平均股价（港元）  我们分别上调 2020 至 2022 年经调整物业 EBITDA 预测 0.9%、6.3%和 2.2%。我们预测 Source: Bloomberg, Guotai Junan International. 彩 2020 至 2022 年经调整物业 EBITDA 分别为-3.09 亿美元、15 亿美元和 24 亿美元。在 2020 行 年第 2 和第 3 季度录得经调整物业 EBITDA 亏损后，我们预测公司将从 2020 年第 4 季度 业 开始实现经调整物业 EBITDA 盈利，而且 EBITDA 利润率将在 2021 年逐步提升。我们预

计 2020 至 2022 年股东净利润分别为-17 亿美元、4.7 亿美元和 14 亿美元。 Gaming Sector

 我们将公司目标价由 28.00 港元上调至 28.70 港元，并将投资评级从“卖出”上调至“减 持”。我们最新的目标价相当于 23.6 倍 2021 年和 14.1 倍 2022 年经调整 EV/EBITDA， 相对我们运用折现现金流方法得出的每股估值 35.99 港元有 20.3%的折让。

Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE

[Ta Profit年结 ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 ble 12/31 (US$ m) (US$ m) (US$) (△ %) (x) (US$) (x) (US$) (%) (%) 2018A 8,665 1,875 0.232 16.6 16.8 0.546 7.1 0.254 6.5 41.9

_In 2019A 8,808 2,033 0.251 8.2 15.6 0.550 7.1 0.254 6.5 45.9 中fo2 2020F 1,789 (1,675) (0.207) (182.5) n.a. 0.252 15.6 0.127 3.2 (51.6) 2021F 5,542 470 0.058 n.a. 67.8 0.343 11.5 0.000 0.0 19.5 外 金] 2022F 7,276 1,354 0.167 187.9 23.6 0.545 7.2 0.000 0.0 37.6

沙运 [Table_BaseData]Shares in issue (m) 总股数 (m) 8,089.9 Major shareholder 大股东 Las Vegas Sands (LVS US) 70.0% 中 输 Market cap. (HK$ m) 市值 (HK$ m) 246,742.0 Free float (%) 自由流通比率 (%) 30.0 国 3 month average vol. 3 个月平均成交股数 (‘000) 15,974.1 FY20 Net gearing (%) FY20 净负债/股东资金 (%) 194.3

52 Weeks high/low (HK$) 52 周高/低 (HK$) 45.450 / 25.150 FY20 Est. NAV (HK$) FY20 每股估值（港元） 36.0

Source: the Company, Guotai Junan International. Sands(01928 HK) China

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[Table_PageHeader]Sands China (01928 HK)

3Q2020 Results

] 1 r a M t h g i R _ e l b a T [

The COVID-19 pandemic continued to have a negative impact during 3Q2020. Due to social distancing measures and travel restrictions as a result of the COVID-19 pandemic, Sands China's (the "Company") properties operated at reduced capacity, with some operations temporarily closed. As previously reported, on 23 Sep. 2020, the Chinese authorities fully resumed applications for the Individual Visit Scheme (IVS), but subject to certain testing requirements and health declarations.

Certain COVID-19 specific protective measures, such as traveller quarantines and requirements for negative COVID-19 tests November2020

before entering Macau, limiting the number of seats per table game, slot machine spacing, temperature checks, mask 10 protection, COVID-19 negative test results requirements for entry to gaming areas, and health declarations remained in effect during 3Q2020 and up through the present time.

Sands China's 3Q2020 total revenue decreased by 92.1% yoy to US$167 million and was 40.1% below our forecast. Sands China's total gross gaming revenue (GGR) was US$108 million, down 94.7% yoy and in line with the 93.1% yoy decline in Macau sector GGR during the quarter. Sands China's VIP turnover decreased 92.8% yoy, in line with the Macau sector VIP GGR decline of 92.5% yoy during the quarter. Sands China's overall VIP win decreased 90.3% yoy to US$43 million. Mass segment (tables and slots) win decreased by 95.9% yoy, underperforming Macau’s mass segment, which saw its GGR decrease by 93.6% yoy.

] 2 r a M t h g i R _ e l b a T [

Sands China's 3Q2020 hold-normalized adjusted property EBITDA loss was US$240 million, which was 127.2% worse than our forecast. The Company’s overall VIP win rate was 4.07%, which was higher than the normal range of 3.15%-3.45%. Hold-normalized adjusted property EBITDA removes the effect of "luck" (the fluctuation in the Company's quarterly VIP win rate). 3Q2020 adjusted property EBITDA loss was US$233 million, compared to an adjusted property EBITDA of US$755 million in 3Q2019. Net loss for the Company was US$562 million, compared to net profit of US$454 million in 3Q2019.

Table-1: The Company’s Results Summary

US$ Million 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 qoq yoy (% or ppt) (% or ppt)

Total VIP Turnover 14,584 15,177 6,460 1,272 1,049 (17.5%) (92.8%)

Overall VIP Win Rate 3.01% 3.64% 3.00% (0.59%) 4.07% 4.66 ppt 1.06 ppt

(01928 HK)

Total VIP Win 439 552 194 (8) 43 n.a. (90.3%) Total Mass Tables Win 1,438 1,465 549 10 55 466.3% (96.2%)

Total Slots Win 160 161 61 5 10 97.5% (93.5%) 金沙中国 Total Mass Market (tables & slots) Win 1,598 1,626 610 15 65 336.8% (95.9%) Total Gross Gaming Revenue 2,036 2,178 804 7 108 1353.1% (94.7%) Total Revenue 2,112 2,241 814 40 167 317.5% (92.1%)

Sands China Shareholders' Net Profit 454 513 (166) (549) (562) (2.4%) (223.8%) Shareholders' Net Profit Margin 21.5% 22.9% (20.4%) (1372.5%) (336.5%) 1036.0 ppt (358.0) ppt

Total Adjusted Property EBITDA* 755 811 67 (312) (233) (25.3%) (130.9%) Total Adjusted Property EBITDA margin 35.7% 36.2% 8.2% (780.0%) (139.5%) 640.5 ppt (175.3) ppt Hold Normalized Adj. Property ETBIDA** 755 781 84 (285) (240) (15.8%) (131.8%) Hold Normalized Adj. Property EBITDA Margin 35.7% 34.9% 10.3% (712.5%) (143.7%) 568.8 ppt (179.5) ppt

Company VIP Market Share 11.4% 12.9% 10.5% (4.0%) 14.5% 18.5 ppt 3.1 ppt Company Mass Market Share 32.5% 30.9% 31.1% 6.9% 20.5% 13.6 ppt (12.0) ppt Company Total Market Share 23.2% 22.8% 21.1% 1.8% 17.6% 15.8 ppt (5.6) ppt Source: the Company, Gaming Inspection and Coordination Bureau Macao SAR, Guotai Junan International. Note: *Adjusted property EBITDA is profit or loss attributable to equity holders of the Company before share based compensation, corporate expense, pre-opening expense, depreciation and amortization, net foreign exchange gains or losses, impairment loss on property and equipment, gain or loss on disposal of property and equipment, investment properties and intangible assets, interest, gain or loss on modification or early retirement of debt and income tax benefit or expense.

**Hold normalized figures adjust for quarterly fluctuations in "luck", i.e., the VIP win rate, whereby if the VIP win rate is outside of the 3.15%‐3.45% normal range, Report

then the win rate is adjusted to 3.30% for the quarter.

Company

See the last page for disclaimer Page 2 of 8 [Table_PageHeader]Sands China (01928 HK)

Table-2: The Company's Property & Segment Level Results Summary US$ Million 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 qoq yoy

] 1 r a M t h g i R _ e l b a T [ (% or ppt) (% or ppt)

Net Revenues Venetian Macao 851 908 315 28 68 142.9% (92.0%) Sands Cotai Central 487 505 170 10 22 120.0% (95.5%) Sands Macao 171 150 69 7 12 71.4% (93.0%)

Plaza Macao 196 246 107 19 25 31.6% (87.2%) November2020 Parisian Macao 381 401 141 (23) 40 n.a. (89.5%) Ferry and others 26 31 12 (1) 0 n.a. n.a. 10

VIP Market Shares Venetian Macao VIP Market Share 4.1% 5.7% 3.7% 0.8% 2.5% 1.7 ppt (1.6) ppt Sands Cotai Central VIP Market Share 0.7% 0.7% 0.5% 0.0% 0.0% 0.0 ppt (0.7) ppt Sands Macao VIP Market Share 1.1% 0.6% 1.2% 0.9% 1.2% 0.3 ppt 0.1 ppt Plaza Macao VIP Market Share 2.9% 2.9% 2.5% 7.2% 3.8% (3.4) ppt 1.0 ppt Parisian Macao VIP Market Share 2.6% 3.0% 2.5% (13.0%) 7.0% 20.0 ppt 4.4 ppt

Mass (tables & slots) Market Shares Venetian Macao Mass Market Share 13.4% 12.3% 12.2% 2.5% 9.8% 7.3 ppt (3.6) ppt

Sands Cotai Central Mass Market Share 8.2% 8.0% 7.1% 0.4% ] 2.1%2 r a M t 1.7h pptg i R (6.1)_ e pptl b a T [

Sands Macao Mass Market Share 3.0% 2.6% 3.0% 2.5% 3.2% 0.7 ppt 0.2 ppt Plaza Macao Mass Market Share 1.8% 2.2% 3.3% 0.6% 1.9% 1.3 ppt 0.1 ppt Parisian Macao Mass Market Share 6.1% 5.8% 5.5% 1.0% 3.5% 2.5 ppt (2.6) ppt

Adjusted Property / Segment EBITDAs Venetian Macao 342 368 49 (97) (78) 19.6% (122.8%) Sands Cotai Central 169 180 0 (79) (71) 10.1% (142.0%) Sands Macao 52 40 (1) (31) (26) 16.1% (150.0%) Plaza Macao 75 102 28 (18) (15) 16.7% (120.0%) Parisian Macao 120 122 (3) (81) (40) 50.6% (133.3%) Ferry and other operations (3) (1) (6) (6) (3) 50.0% 0.0%

Adjusted Property / Segment EBITDA Margins (01928 HK)

Venetian Macao 40.2% 40.5% 15.6% (346.4%) (114.7%) 231.7 ppt (154.9) ppt Sands Cotai Central 34.7% 35.6% 0.0% (790.0%) (322.7%) 467.3 ppt (357.4) ppt

Sands Macao 30.4% 26.7% (1.4%) (442.9%) (216.7%) 226.2 ppt (247.1) ppt 金沙中国 Plaza Macao 38.3% 41.5% 26.2% (94.7%) (60.0%) 34.7 ppt (98.3) ppt Parisian Macao 31.5% 30.4% (2.1%) 352.2% (100.0%) (452.2) ppt (131.5) ppt Ferry and other operations (11.5%) (3.2%) (50.0%) (300.0%) n.a. n.a. n.a.

Source: the Company, Guotai Junan International. Sands China

Outlook & Forecast Updates

The Company saw a significant improvement in October visitation and GGR. The third quarter results are not representative of the current outlook, as the resumption of visa issuance across all provinces in China only commenced towards the end of September. In October, although overall visitation and volume in the Company’s base mass and VIP segments remained low due to ongoing travel restrictions, there were signs of improvement, in particular in the Company’s premium mass segment. For the first three weeks of October, the month-to-date non-rolling drop per day was just over US$20 million, or approximately 30% of last year’s level, allowing the Company to achieve slightly positive EBITDA for the month to date based on the current cost structure and business mix. October was the first time since January that the Company has seen significant visitation numbers and gaming play. Premium mass has been the strongest segment by far for the Company, and the Company's management indicated that visitors coming to Macau are the high-quality, high-frequency customers.

What's particularly encouraging is that after 1-8 Oct. Golden Week holiday, after an expected dip in the second week of October, Report there was a very notable rebound in the third week of October, when the Company was still averaging around or just under

US$20 million drop per day.

Company The Company has also seen a rebound in its retail businesses. Along with the recovery in premium mass GGR and

See the last page for disclaimer Page 3 of 8

oPpRpQsOmOrPmNpQoQsMrRaQaO8OsQqQsQoOfQnMrQkPrQpP6MnPrRwMsRtNMYnNxP [Table_PageHeader]Sands China (01928 HK)

resurgence of Chinese domestic consumption growth, the Company experienced strong recovery in its retail malls in October,

with the luxury retail segment enjoying the strongest performance. In particular,] 1 r thea Company'sM t h Fourg i SeasonsR _ e luxuryl b retaila T [

segment has seen a strong rebound which began in September and continued into October. A number of the Company's premium brand tenants in the Four Seasons Mall actually had positive yoy sales growth in the first two weeks of October, helped by the opening of the Grand Suites at Four Seasons on 1 October.

The Company’s management maintains its Cotai expansion guidance. The Company’s management estimates that it will November2020

invest around US$2.2 billion on the conversion of The Londoner Macao, The Londoner Court (previously referred to as The 10 Londoner Tower Suites) and Grand Suites at Four Seasons Macao. Of the planned capex for these three properties, about US$1.4 billion has been invested up through 21 October 2020. We expect that the new property development, which is aimed at the premium mass segment, will lead to an increase in the Company's market share in 2021 and 2022.

The Grand Suites at Four Seasons Figure-1: Sands China's Cotai Development Macao opened on 1 October. Around US$450 million was used on renovation of the "Four Seasons Tower Suites Macao" into "Grand Suites at Four Seasons

Macao", which has about 290 new luxury ] 2 r a M t h g i R _ e l b a T [

suites (adding about 1 million sq.ft in new suite capacity), ranging in size from 2,000-4,700 sq. ft. The Grand Suites at Four Seasons is the largest Four Seasons hotel in the world is aimed at the premium mass segment. The property's new suites have been receiving great customer

feedback since the Golden Week holiday period, according to the Company's management.

(01928 HK) The Londoner Court is targeted to open in late 2020. Around US$400 million is

being used for conversion and rebranding 金沙中国 of the hotel tower previously known as St. Regis into The Londoner Court (previously called "The Londoner Tower Suites"). It will have approximately 370 luxury suites Sands China ranging in size from 1,400 to 3,100 sq.ft, adding about 1 million sq.ft in new suite capacity.

The Londoner Macao Hotel. The previous Source: the Company's 3Q2020 results presentation.

1,224 room Holiday Inn Macao hotel tower is being converted to have around 600 suites under the new theme brand "The Londoner Macao", with total capex of about US$1.35 billion. The property is planned to open in stages in 2020 and 2021.

We have increased our 2020-2022 revenue forecasts by 8.0%, 23.8% and 9.1%, respectively. Our updated forecasts reflect 2020 to 2022 total revenue of US$1.8 billion, US$5.5 billion and US$7.3 billion, representing growth of -79.7%, 209.8% and 31.3%, respectively. With the COVID-19 pandemic under control in mainland China, we expect continued steady recovery

of Macau GGR in 4Q2020 and going into 2021. However, even if travel to and from Macau remains open, an uncertain global Report economy growth outlook could also put downward pressure on Macau gaming recovery and so we assume it could be years before gaming revenue grows back to 2019 levels. Our 2020-2022 Sands China revenue forecasts are equivalent to 20.3%,

62.9% and 82.6% of the Company's 2019 revenue. Company

See the last page for disclaimer Page 4 of 8 [Table_PageHeader]Sands China (01928 HK)

We have increased our 2020-2022 adjusted property EBITDA forecasts by 0.9%, 6.3% and 2.2%, respectively. We

forecast 2020 to 2022 adjusted property EBITDA of -US$309 million, US$1.] 51 billionr a andM US$2.t h 4 g billion,i R respectively_ e l . b Aftera T [

recording adjusted EBITDA losses in 2Q2020 and 3Q2020, we expect the Company to achieve adjusted EBITDA profit starting from 4Q2020. We expect that adjusted EBITDA margin will steadily increase through 2021 along with steady growth in revenue. We forecast 2020 to 2022 shareholders' net profit of -US$1.7 billion, US$470 million and US$1.4 billion, respectively. We forecast 2020 to 2022 EPS of -US$0.207, US$0.058 and US$0.167, respectively. We assume that there will be no dividend

payments during 2020-2022 as the sector and the Company recovers, allowing the Company enough cash reserves to pay November2020

down debt, which will also lower interest expense, thereby increasing net profit. 10

Table-3: Forecast Revisions US$ Million Old New % Change

(Except VIP Turnover & EPS) 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F

Net Gaming Revenue 1,252 3,528 5,255 1,324 4,305 5,649 5.8% 22.0% 7.5%

Hotel & Other Revenue 376 893 1,330 454 1,166 1,533 20.8% 30.6% 15.3%

Ferry & Other Segment Revenue 29 57 86 11 71 93 (62.3%) 23.8% 9.1%

Total Net Revenue 1,657 4,478 6,670 1,789 5,542 7,276 8.0% 23.8% 9.1%

Operating Profit (961) 553 1,476 (1,391) 796 1,638 (44.7%) 44.0% 11.0%

] 2 r a M t h g i R _ e l b a T [ Operating Profit Margin (58.0%) 12.3% 22.1% (77.8%) 14.4% 22.5% (19.7) ppt 2.0 ppt 0.4 ppt

Adjusted Property EBITDA (312) 1,410 2,327 (309) 1,499 2,379 0.9% 6.3% 2.2%

Adj. Property EBITDA Margin (18.8%) 31.5% 34.9% (17.3%) 27.1% 32.7% 1.5 ppt (4.4) ppt (2.2) ppt

Shareholders' Net Profit (1,240) 236 1,200 (1,675) 470 1,354 (35.0%) 99.7% 12.8%

Shareholders' Net Profit Margin (74.8%) 5.3% 18.0% (93.6%) 8.5% 18.6% (18.8) ppt 3.2 ppt 0.6 ppt

EPS, Basic (US$) (0.153) 0.029 0.148 (0.207) 0.058 0.167 (35.0%) 99.7% 12.8%

EPS, Diluted (US$) (0.153) 0.029 0.148 (0.207) 0.058 0.167 (35.0%) 99.7% 12.8%

Source: Guotai Junan International.

Note: *Adjusted property EBITDA is profit or loss attributable to equity holders of the Company before share based compensation, corporate expense, pre-opening expense, depreciation and amortization, net foreign exchange gains or losses, impairment loss on property and equipment, gain or loss on disposal of property and equipment, investment properties and intangible assets, interest, gain or loss on modification or early retirement of debt and income tax benefit or expense.

(01928 HK)

Valuation 金沙中国

We increase our target price from HK$28.00 to HK$28.70 and upgrade from "Sell" to "Reduce" investment rating. The

Company's share price has decreased by 8.4% since our last Company Report published on 28 August. Our new target price is Sands China equivalent to 23.6x and 14.1x 2021 and 2022 EV/ adjusted EBITDA and is a 20.3% discount to our DCF derived NAV per share of HK$35.99.

Table-4: DCF Valuation

Risk Free Rate 0.69% Sum of PV FCFF (US$ mn) 17,696 Market Return 10.12% + PV Terminal Value (US$ mn) 26,197 Market Risk Premium 9.44% Enterprise Value (US$ mn) 43,893 Adj. Beta 1.1 - Net Debt/(cash) (US$ mn) 6,301 Equity Discount Rate 11.06% Equity Value (US$ mn) 37,592

After Tax Cost of Debt 5.0% Shares Outstanding at year end (mn) 8,095.3 D/(D+E) 71.3% NAV per Share (US$) 4.64 E/(D+E) 28.7% Exchange Rate 7.75

WACC 6.8% NAV per Share (HK$) 35.99

Long term growth rate 3.0%

Report

Source: Bloomberg, the Company, Guotai Junan International.

Company

See the last page for disclaimer Page 5 of 8 [Table_PageHeader]Sands China (01928 HK)

Table-5: Gaming Sector Peers Comparison

Company PE ] 1 EV/Adjustedr a M EBITDAt h g i R _ e l b a T [

Stock Crncy Price M-Cap PBR ROE Yield

Code (mn) Bn Hist Avg. 20F 20F 20F

(HK$) 19A 20F 21F Fwd2 Fwd2 19A 20F 21F (%) (%) Macau

Galaxy Entertain 00027 HK HKD 58.850 255.6 19.5 n.a. 25.0 14.5 390.7 15.4 390.7 16.4 3.9 (2.4) 0.3

Melco Reso-Adr MLCO US USD 16.200 59.9 20.8 n.a. 59.3 10.4 16.2 10.7 n.a. 10.7 7.3 (60.2) 0.3

Mgm China 02282 HK HKD 10.500 39.9 20.7 n.a. 41.0 12.2 n.a. 11.2 n.a. 12.6 8.1 (65.5) 0.1

November2020 Sands China Ltd 01928 HK HKD 30.500 246.7 15.5 n.a. 22.9 15.0 n.a. 15.7 n.a. 15.9 14.6 (39.1) 1.6

Sjm Holdings Ltd 00880 HK HKD 8.870 50.3 15.7 n.a. 32.7 14.9 n.a. 12.6 n.a. 14.8 2.0 (11.0) 0.6 10

Wynn Macau Ltd 01128 HK HKD 12.460 64.8 12.7 n.a. 27.4 12.8 n.a. 13.4 n.a. 13.4 n.a. 336.1 0.2

Simple Avg. 19.3 n.a. 34.7 12.6 203.4 12.5 390.7 13.4 6.4 26.3 0.5

Weighted Avg. 17.4 n.a. 28.8 14.1 319.5 14.5 390.7 15.2 8.3 6.6 0.7

USA

Boyd Gaming BYD US USD 33.230 28.7 23.9 n.a. 15.1 10.8 7.4 8.5 11.3 7.0 3.4 (2.1) 0.2

Caesars Entertai CZR US USD 56.890 90.0 54.7 n.a. n.a. 12.3 10.8 11.0 28.2 11.0 3.0 (51.4) 0.0

Las Vegas Sands LVS US USD 52.980 313.8 15.1 n.a. 32.8 14.0 22.0 12.8 n.a. 16.0 14.0 (33.0) 1.7

Mgm Resorts Inte MGM US USD 22.020 84.3 5.6 n.a. n.a. 20.1 19.0 6.5 n.a. 14.3 1.4 (21.4) 0.7

Penn Natl Gaming PENN US USD 63.860 76.9 168.1 n.a. 43.2 8.2 16.4 10.1 16.4 11.1 3.7 (28.7) n.a.

Wynn Resorts Ltd WYNN US USD 80.070 67.0 69.6 n.a. n.a. 15.0 22.1 14.9 n.a. 15.9 n.a. (306.2) 1.3

] 2 r a M t h g i R _ e l b a T [ Simple Avg. 56.2 n.a. 30.4 13.4 16.3 10.6 18.6 12.6 5.1 (73.8) 0.8

Weighted Avg. 43.0 n.a. 21.2 13.9 18.8 11.5 21.0 14.1 8.7 (59.9) 1.2

Other

Bloomberry Res BLOOM PM PHP 8.040 14.2 8.9 n.a. 29.6 13.7 56.2 2.0 56.2 10.4 2.5 (17.7) 2.2

Belle Corp BEL PM PHP 1.520 2.4 5.5 30.4 8.4 5.7 14.6 5.4 14.6 6.8 0.5 n.a. 9.2

Simple Avg. 7.2 30.4 19.0 9.7 35.4 3.7 35.4 8.6 1.5 (17.7) 5.7

Weighted Avg. 8.4 30.4 26.5 12.5 50.2 2.5 50.2 9.9 2.2 (17.7) 3.2

Source: Bloomberg, the Company, Guotai Junan International. Note: "Hist Avg. Fwd" is the average forward valuation ratio over the past five years, taken from Bloomberg. Forward valuations are the Bloomberg consensus

forward valuations which are based on the next four quarters, next two semi-annuals or next fiscal year.

Table-6: Sands China Valuation and Target Price Based Multiples

FY19A FY20F Next 4 Quarters FY21F FY22F (01928 HK)

Target Price HK$28.70

Shares Outstanding, Period End, Fully Diluted (mn) 8,090 8,095 8,098 8,099 8,101 金沙中国

TP Based Market Cap (HK$ mn) 232,189 232,334 232,418 232,446 232,493

+ Period End Minority Interest (HK$ mn) 0 0 0 0 0

+ Period End Borrowings (HK$ mn) 43,546 53,669 53,320 53,204 45,764

- Period End Cash & Equivalents (HK$ mn) 19,369 4,986 9,639 11,190 17,606

Year End Enterprise Value (HK$ mn) 256,366 281,017 276,099 274,460 260,650 Sands China

Adjusted EBITDA (HK$ mn) 24,878 (2,395) 8,003 11,618 18,439

TP Based EV/Adjusted EBITDA 10.3 n.a. 34.5 23.6 14.1

EPS (HK$), Diluted 1.958 n.a. n.a. 0.450 1.295

Target Price Based PER 14.3 n.a. n.a. 63.8 22.2

Source: the Company, Guotai Junan International. Note: Valuations are based on Guotai Junan International forecasts.

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Company

See the last page for disclaimer Page 6 of 8 [Table_PageHeader]Sands China (01928 HK)

Financial Statements and Ratios

[Table_IncomeStatement] Income Statement [Table_BalanceSheet]] 1 r a M t Balanceh Shg eeti R _ e l b a T [

Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F Total revenue 8,665 8,808 1,789 5,542 7,276 PP&E 8,134 8,361 8,847 8,938 8,781 Gaming tax (3,430) (3,421) (667) (2,226) (2,932) Investment properties 629 587 548 511 477 Employee benefit expenses (1,238) (1,292) (625) (813) (2,542) Others 115 105 98 101 119

Depreciation and amortisation (655) (706) (687) (707) (705) Total non-current assets 8,878 9,053 9,493 9,550 9,377 November2020

Inventories consumed (99) (97) (112) (61) (456) 10 Other expenses (1,089) (1,017) (1,089) (938) 998 Cash & cash equivalents 2,676 2,471 627 1,426 2,252 Operating profit 2,154 2,275 (1,391) 796 1,638 Inventories 14 16 16 11 15 Receivables & prepayments 477 545 368 334 434 Interest income 20 38 31 21 37 Restricted cash 13 15 16 18 20 Interest expense, net (225) (280) (315) (347) (321) Total current assets 3,180 3,047 1,027 1,789 2,721 Loss on debt (81) 0 0 0 0

Profit before tax 1,868 2,033 (1,675) 470 1,354 Total assets 12,058 12,100 10,520 11,339 12,097

Income tax 7 0 0 0 0 Trade and other payables 1,928 1,874 1,370 1,452 1,539

Current income tax liabilities 5 5 2 4 6 Profit after tax 1,875 2,033 (1,675) 470 1,354 Borrowings 10 19 19 28 25 Non-controlling interest 0 0 0 0 0 Total current liabilities 1,943 1,898 1,391 1,484 1,570

] 2 r a M t h g i R _ e l b a T [ Shareholders' profit / loss 1,875 2,033 (1,675) 470 1,354

Long-term debts 5,552 5,589 6,925 6,865 5,905 Adjusted EBITDA 3,079 3,193 (309) 1,499 2,379 Others 154 167 164 211 205

Total non-current liabilities 5,706 5,756 7,089 7,076 6,110 Basic EPS 0.232 0.251 (0.207) 0.058 0.167

Diluted EPS 0.232 0.251 (0.207) 0.058 0.167 Total liabilities 7,649 7,654 8,480 8,560 7,680

Total shareholders' equity 4,409 4,446 2,040 2,779 4,417 [Table_CashFlowStatement] Cash Flow Statement Minority interest 0 0 0 0 0

Total equity 4,409 4,446 2,040 2,779 4,417 Year end 31 Dec (USD m) 2018A 2019A 2020F 2021F 2022F

Net income 1,875 2,033 (1,675) 470 1,354

D&A 655 706 687 707 705 [Table_FinancialRatio] Financial Ratios

Other non-cash adjustments 439 336 (3) 2 2 (01928 HK)

2018A 2019A 2020F 2021F 2022F Changes in working capital 80 (263) (328) 159 (33) Margins Cash from operating activities 3,049 2,812 (1,319) 1,339 2,027 Effective gaming tax rate (%) 39.5 39.5 39.5 39.5 39.5

Operating margin (%) 24.9 25.8 -77.8 14.4 22.5 金沙中国 Property & investment (492) (720) (1,171) (798) (548) Investment properties (16) (16) 39 37 34 Net profit margin (%) 21.6 23.1 -93.6 8.5 18.6 Others (5) 21 33 25 28 Adj. EBITDA margin (%) 35.5 36.3 -17.3 27.1 32.7 Cash from investing activities (513) (715) (1,099) (736) (485)

Return ratios (%) Sands China Dividends paid (2,052) (2,051) (1,028) 0 0 ROA (%) 16.5 16.8 -14.8 4.3 11.6 Change in borrowings 942 (13) 1,336 (51) (963) ROE (%) 41.9 45.9 -51.6 19.5 37.6 Others 10 (248) 247 247 247 Return on capital invested (%) 25.0 27.4 -21.1 5.7 16.6 Cash from financing activities (1,100) (2,312) 556 196 (716) Liquidity & leverage Net changes in cash 1,437 (215) (1,862) 799 826 Leverage (i.e., gearing) (%) 124.3 126.7 214.1 286.1 164.8 Cash at beg of year 1,239 2,676 2,471 627 1,426 Net gearing (%) 64.2 70.5 194.3 226.1 101.7 Effect of exchange rate 0 10 18 0 0 Interest coverage ratio (x) 10.5 9.4 n.a. 2.4 5.8 Cash at end of year 2,676 2,471 627 1,426 2,252 Current ratio (x) 1.6 1.6 0.7 1.2 1.7

Source: the Company, Guotai Junan International.

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[Table_CompanyRatingDefinition] See the last page for disclaimer Page 7 of 8 [Table_PageHeader]Sands China (01928 HK)

Company Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%;

or the fundamental outlook of the company or sector is favorable. November2020 Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. 10 Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [

or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERE OF INTERESTS STS] (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.

(3) Except for GUOTAI JUNAN I (01788 HK),JXR (01951 HK),JINSHANG BANK (02558 HK),HAITIAN ANTENNA (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research

Report within the preceding 12 months. (01928 HK) (5) Guotai Junan and its group companies are making, or will make a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research

Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies. 金沙中国

DISCLAIMER Sands China This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

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